| Overview |
If your Corporation Tax return in BTCSoftware is calculating at 25% when the company should be eligible for a lower blended rate (because its profits fall between £50,000 and £250,000), the most common cause is that the Marginal Relief supplementary schedule is missing from the return.
| ✔ Tip: This is a very quick fix , adding the Marginal Relief schedule takes less than two minutes and the rate will recalculate automatically. |
| Understanding CT Rates (2023 Onwards) |
| Profit Level | CT Rate | Notes |
|---|---|---|
| Up to £50,000 | 19% | Small profits rate — applies automatically |
| £50,001 to £250,000 | 19%–25% blended | Marginal Relief reduces the effective rate — Marginal Relief schedule required |
| Above £250,000 | 25% | Main rate — applies automatically |
If a company's profits fall in the middle band but you have not added the Marginal Relief schedule, BTCSoftware will apply 25% to the full amount and Box 329 on the CT600 will not be ticked.
| How to Add the Marginal Relief Schedule |
- Open the Corporation Tax return in BTCSoftware.
- In the left-hand navigation pane, look for Supplementary Pages or Schedule Selection.
- Find Marginal Relief in the list of available supplementary schedules.
- Tick the Marginal Relief schedule to include it in the return.
- BTCSoftware will automatically tick Box 329 on the CT600 and recalculate the CT liability using the correct blended rate.
- Run Check and Calculate to confirm the revised liability.
| ✔ Tip: After adding Marginal Relief, review the CT computation to confirm the effective rate now reflects the blended calculation rather than a flat 25%. |
| Associated Companies and Marginal Relief |
Where a company has associated companies, the £50,000 and £250,000 thresholds are divided by the number of associated companies plus one. For example, a company with one associated company has thresholds of £25,000 and £125,000.
To enter associated company details in BTC Software:
- On the CT600 form, locate Box 328.
- Enter the number of associated companies (not including the company itself).
- BTC Software will adjust the Marginal Relief calculation accordingly.
| When 25% Is Actually Correct |
The 25% rate is correct and expected if:
- The company's augmented profits (including franked investment income) exceed £250,000 — or the threshold adjusted for associated companies.
- The return covers a short accounting period and time-apportioned thresholds bring the company above the small profits threshold.
| Frequently Asked Questions |
Q: Does Marginal Relief apply to all companies with profits between £50,000 and £250,000?
A: Marginal Relief applies to companies that are not close investment holding companies. Most standard trading companies are eligible. Check HMRC's guidance if you are unsure whether a specific company qualifies.
Q: The Marginal Relief schedule is already included but the rate is still 25% — what should I check?
A: Check Box 328 on the CT600 — if the company has associated companies and the number is entered incorrectly, the adjusted threshold may mean the company falls above the Marginal Relief band. Also check that the company's augmented profits (not just trading profits) are correctly reflected.
Q: Does the Marginal Relief calculation change for short accounting periods?
A: Yes. For accounting periods shorter than 12 months, the £50,000 and £250,000 thresholds are time-apportioned. BTCSoftware handles this automatically once the accounting period dates are correctly entered.