News and insights from the Verallo team
Check if you’ve claimed marginal relief in error
HMRC is actively contacting companies that may have incorrectly claimed marginal relief on their corporation tax returns. One of the most common reasons is missing or misreporting associated companies.
Since April 2023, companies with profits between £50,000 and £250,000 have been eligible for marginal relief. But here’s the catch: these thresholds are divided between all associated companies. For example, if your business has just one associated company, those limits drop to £25,000 and £125,000.
The rules on what counts as an associated company aren’t always straightforward, particularly where ownership or control is indirect or shared.
What’s happening now?
HMRC is writing to companies that may have applied the rules incorrectly. If contacted, businesses are being asked to:
- Amend their return (if still within the time limit),
- Make a voluntary disclosure, or
- Confirm that no correction is needed.
How can you check?
- Review your structure for entities under shared or common control – this includes shareholders, not just directors.
- Adjust your thresholds to reflect the correct number of associated companies.
- Recalculate whether you were entitled to marginal relief.
- Check that your corporation tax return included the right number in the “associated companies” box.
Even if you haven’t received a letter, it’s a good time to review your position.
If you’d like support with this, or with responding to HMRC, we’re here to help.
Get in touch with our team of experts of call us on 0203 912 9933.