CTM03520 - Corporation Tax: small companies: the starting rate
For financial years 2000 to 2005 (i.e. the year beginning 1 April 2000 to the year beginning 1 April 2005), ICTA88/S13AA extends relief for small companies by introducing a rate of CT even lower than the small companies' (see CTM03505) rate. This is known as the CT starting rate. It applies to companies with profits not exceeding £10,000.
Companies with profits between £10,000 (the first relevant amount) and £50,000 (the second relevant amount) are entitled to marginal relief calculated in the same way as small companies' marginal relief except the basic profits are charged at small companies' rate, rather than the full rate of CT, against which the marginal relief is set (see CTM03540). Where profits exceed the second relevant amount, the basic profits are charged at the small companies' rate up to but not exceeding the lower relevant maximum amount.
The scope of the starting rate legislation in terms of calculation of profits, excluded companies, associated companies, length of accounting periods, straddling accounting periods etc is the same as the legislation for the small companies' rate at ICTA88/S13.
The starting rate of CT, and relevant limits and fractions, applicable to small companies are as follows:
Financial year |
Rate |
First relevant amount where no associated company** |
Second relevant amount where no associated company** |
ICTA88/S13AA fraction |
2000 |
10% |
£10,000 |
£50,000 |
1/40 |
2001 |
10% |
£10,000 |
£50,000 |
1/40 |
2002 |
0% |
£10,000 |
£50,000 |
19/400 |
2003 |
0% |
£10,000 |
£50,000 |
19/400 |
2004 |
0% |
£10,000 |
£50,000 |
19/400 |
2005 |
0% |
£10,000 |
£50,000 |
19/400 |
Small Companies Starting Rate withdrawn from Financial Year 2006
**based on a 12 month accounting period.
