Associated companies ― prior to 1 April 2015

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Associated companies ― prior to 1 April 2015
  • Implications
  • Definition
  • Changes during the accounting period
  • Associates and attribution of rights and powers
  • Minimum controlling combination
  • HMRC toolkit


The existence of associated companies means that the corporation tax limits of £1.5m and £300,000 are divided equally among all of the associated companies. It is these revised limits that are used in any marginal relief calculation. See Example 1 for an illustration.

CTA 2010, s 24

With the unification of corporation tax rates from 1 April 2015, these rules have been replaced with effect from 1 April 2015 as they are no longer necessary. As well as for the purpose of ascertaining which corporation tax rates apply to associated companies, there are other instances where associated companies rules are required. These are for the purpose of the patent box, the capital allowances long life assets rules and the quarterly instalment payment rules. Finance Act 2014 included new, simpler associated companies rules based on a 51% group company test inserting the new legislation in CTA 2010, s 279F. See the Future associated companies rules and corporation tax rate changes news item for further information on the rules which came into force on 1 April 2015.

The remainder of this guidance note discusses the associated companies rules that apply up to 31 March 2015.


Companies are associated with each other if one company controls another company, or two companies are controlled by the same person or persons.

CTA 2010, s 25(4)

The definition of person in the Taxes Acts is very wide. It includes, for instance, a company, an individual or individuals, trustees of a trust, or partners in a partnership. For instance, if ICI plc has two subsidiaries, both of them ‘controlled by’ ICI, all three companies are associated.

The definition of 'control' is as for the close company rules, with modifications. For guidance on the definition of control, and the rules regarding the attribution of rights or powers, see the

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