Associated Companies CT600 UK: Complete Guide with Examples (2026)
If you prepare Corporation Tax returns (CT600) in the UK, understanding associated companies is essential. Since the UK introduced the marginal Corporation Tax rate from April 2023, the number of associated companies directly affects the tax rate a company pays.
Many company directors and even accountants misunderstand the associated company rules, particularly where there are multiple shareholders, family members, or several businesses under common ownership.
This guide explains:
What associated companies are in the UK
How control is defined for Corporation Tax
How associated companies affect Corporation Tax rates
How to calculate the number of associated companies for CT600
Practical examples including 50/50 shareholders and multi-company structures
The rules are based on the Corporation Tax Act 2010 and guidance published by HM Revenue & Customs.
What Are Associated Companies?
Two companies are associated for Corporation Tax purposes if:
One company controls the other, or
Both companies are under the control of the same person or persons
This definition is found in CTA 2010 and explained in HMRC manuals such as CTM03570.
The concept of control is crucial when determining whether companies are associated.
How Control Is Defined for Corporation Tax
Control is defined under CTA 2010 s450 and explained by HM Revenue & Customs.
A person or group of persons is considered to control a company if they have the ability to control its affairs through:
Majority voting rights
Ownership of share capital
Rights to the company’s income
Rights to the company’s assets on winding up
Power to control the board or company decisions
Importantly, two or more persons together can control a company, even if neither person individually holds more than 50%.
This is where many associated company calculations become complicated.
Why Associated Companies Matter for Corporation Tax
The number of associated companies determines the Corporation Tax profit thresholds.
Since April 2023, the UK has a three-tier Corporation Tax system:
Profit Level - - - Tax Rate
Up to £50,000 19% (Small profits rate)
£50,000 – £250,000 Marginal relief
Above £250,000 25% (Main rate)
However, these thresholds are divided by the number of associated companies plus one.
This means the more associated companies there are, the lower the profit thresholds become.
Example of Threshold Adjustment
Suppose a company has two associated companies.
Total companies = 3
The thresholds are divided by 3:
Threshold - Calculation - New Limit
Small profits rate £50,000 ÷ 3 = £16,667
Main rate threshold £250,000 ÷ 3 = £83,333
As a result, the company may enter the 25% tax band much earlier.
How to Determine Associated Companies for CT600
When preparing a CT600, accountants should follow this process:
Step 1: Identify company shareholders
Determine who owns the shares and voting rights.
Step 2: Identify who controls each company
Control can be exercised by:
One individual
A group of individuals
Another company
Step 3: Compare controlling persons
Two companies are associated if the same person or group controls both companies.
Step 4: Consider attribution rules
Rights of associates (family members, partners) may be attributed when determining control.
Example 1 – Single Owner Multiple Companies
Structure
Company - - - Ownership
Company A - Mr Rahman 100%
Company B - Mr Rahman 100%
Company C - Mr Rahman 100%
Since one person controls all companies, they are all associated.
For Company A, associated companies are:
Company B and Company C
Associated companies = 2
Example 2 – Parent and Subsidiary Companies
Structure
Company - - - Ownership
Company A - Holding company
Company B - 100% owned by Company A
Company A controls Company B.
Therefore:
Company A and Company B are associated companies.
Associated companies = 1
Example 3 – Two Shareholders Owning Separate Companies
Structure
Company - - - Ownership
Company A - Mr Ahmed 50%, Mr Khan 50%
Company B - Mr Ahmed 100%
Company C - Mr Khan 100%
Control of Company A:
Mr Ahmed + Mr Khan together
Control of Company B:
Mr Ahmed alone
Control of Company C:
Mr Khan alone
Because the same controlling persons do not control all companies, the companies are not associated.
Associated companies for Company A:
0
This is a very common scenario in small businesses.
Example 4 – Two Shareholders Controlling Multiple Companies Together
Structure
Company - - - Ownership
Company A - Ahmed 50%, Khan 50%
Company B - Ahmed 50%, Khan 50%
Company C - Ahmed 50%, Khan 50%
All companies are controlled by the same two shareholders together.
Therefore all companies are associated.
For Company A:
Associated companies = 2
Example 5 – Majority Shareholder Controls Multiple Companies
Structure
Company - - - Ownership
Company A - Ahmed 70%, Khan 30%
Company B - Ahmed 100%
Since Ahmed controls both companies, they are associated.
Associated companies = 1
Example 6 – Family Ownership and Attribution Rules
The attribution rules under CTA 2010 s451 mean that rights of certain associates may be attributed.
Associates include:
Spouses
Parents
Children
Business partners
Structure
Company - - - Ownership
Company A - Mr Ahmed 100%
Company B - Mrs Ahmed 100%
Since spouses are associates, HMRC may attribute rights between them when testing control.
Depending on the circumstances, the companies may be considered associated.
Professional advice is recommended in these situations.
Example 7 – Complex Multi-Company Structure
Structure
Company - - - Ownership
Company A -- A 50%, B 50%
Company B -- A 60%, B 40%
Company C -- A 100%
Control analysis:
Company A → controlled by A + B
Company B → controlled by A alone
Company C → controlled by A alone
Companies B and C are associated.
Company A may not be associated depending on minimum controlling combinations.
These structures require careful analysis when filing CT600.
Common Mistakes When Determining Associated Companies
Many business owners misunderstand the rules.
Typical mistakes include:
Assuming all companies owned by shareholders are associated
Not always true. Control must be exercised by the same person or group.
Ignoring joint control
Two shareholders may control a company together.
Ignoring attribution rules
Family members may create indirect control.
Forgetting to update CT600 figures
The number of associated companies must be declared correctly.
Incorrect reporting can lead to incorrect Corporation Tax calculations.
Associated Companies and Tax Planning
Understanding associated company rules helps businesses with:
Corporation Tax planning
Group structure planning
Profit allocation
Investment company structures
Property investment structures
Professional structuring can sometimes reduce the impact of marginal tax rates.
When Should Businesses Seek Professional Advice?
You should consult an accountant if:
You own multiple companies
You have family members owning businesses
You operate property companies
You are planning new company structures
Your profits are approaching Corporation Tax thresholds
Professional advice ensures compliance with **HM Revenue & Customs regulations and accurate CT600 filings.
How We Can Help
At S & B Accountants Ltd, we support businesses across the UK with:
Corporation Tax returns (CT600)
Associated company analysis
Tax planning for multi-company structures
Company accounts preparation
HMRC compliance and advisory services
If you operate multiple companies or are unsure about associated companies for CT600, our experienced accountants can review your structure and ensure your Corporation Tax returns are accurate and tax-efficient.
Final Thoughts
The associated company rules in the UK are an important part of Corporation Tax compliance. With the introduction of the 25% Corporation Tax rate and marginal relief, these rules now have a much greater impact on businesses.
Correctly identifying associated companies ensures:
Accurate Corporation Tax calculations
Proper CT600 reporting
Avoidance of potential HMRC enquiries
If your business operates multiple companies, understanding the control tests and associated company rules is essential for effective tax management.