Corporation tax is a major cost for limited companies, but with the right structure and planning, it’s also an area where significant savings can be made. At Dunkley’s Accountants in Bristol, we specialise in tax advice for companies of all sizes, from single-entity businesses to complex group structures, helping you make the most of available reliefs and stay compliant.
The Basics
For most UK companies, corporation tax is charged at the main rate of 25% on taxable profits. Smaller businesses with profits under £50,000 continue to pay 19%, with marginal relief applying between £50,000 and £250,000.
But for businesses with group companies or financing arrangements, there are further layers of complexity. Getting these right can prevent double taxation and optimise the use of group losses.
Group and Consortium Relief
Companies within the same group can share losses through group relief, allowing one company’s losses to offset another’s taxable profits.
To qualify:
- There must be at least 75% common ownership between the companies.
- Both must be UK-resident or trading through a UK permanent establishment.
Consortium relief applies where several companies jointly own another company. Each consortium member can claim a proportion of the losses, depending on its ownership percentage.
These reliefs can improve cashflow across a group, but careful record-keeping and timing are essential – especially if companies have different year-ends or ownership changes.
Loan Relationships
If your company borrows or lends money within a group, you’ll fall under the UK’s loan relationship rules. These govern how interest, write-offs, and other financing transactions are taxed.
The aim is to match tax treatment to your accounts – but anti-avoidance rules prevent duplication of relief or mismatches between connected companies.
Regularly reviewing your intra-group loans helps you identify potential reliefs, avoid disallowances, and ensure accurate reporting.
Other Key Considerations
- Associated companies: The £50,000 and £250,000 profit thresholds are divided equally between associated companies.
- R&D and capital allowances: Qualifying investments and innovation work can significantly reduce your corporation tax bill.
- Interest restriction rules: Large groups may face limits on deductible interest expenses.
How Dunkley’s Can Help
Our corporate tax specialists in Bristol can:
- Review your group structure to ensure reliefs are used effectively.
- Assess the tax impact of reorganisations or new subsidiaries.
- Optimise your financing and loan arrangements.
- Handle complex HMRC correspondence and compliance.
Final Thoughts
Corporation tax planning for groups requires precision – one small oversight can affect the entire structure. With Dunkley’s Accountants in Bristol providing expert tax advice, you can be confident your group reliefs, loans, and filings are fully optimised and compliant.
If you’d like advice on this, or any aspect of your finances, contact our experienced team here at Dunkley’s Accountants. Call us or book a consultation online to get started on 01454 619900 or email advice@dunkleys.accountants.