How Marginal Relief is Calculated

Profits from above £300K up to £1.5 million qualify for marginal relief. This shows how marginal relief is calculated and historical rates from 1973.

Caveat

This article explains how marginal relief for UK coporation tax was calculated. From tax year commencing 1st. April 2015 the small and large rates of corporation have been unified. As a result marginal relief now no longer applies.

The Marginal Relief Fraction

Taxable profits greater than £300,000 up to a maximum of £1.5 million qualified for additional corporation tax relief. This was marginal relief, based on a fraction that is applied to the taxable profit.

To Illustrate this the following example calculates the marginal relief of a business with a financial year running from 1st. April 2012 to 31st. March 2013 and a taxable profit of £350,000. The fraction for that year is 4/400.

Upper limit for marginal relief £1,500,000
less: Taxable profit £350,000
C/Fwd £1,150,000
Divide C/Fwd by 400 £2,875
And multiply by 4 - Thereby returning the value of marginal relief £11,500
Corporation tax (£350,000 x 24%) £84,000
Tax payable after deduction of marginal relief £72,500

Abolition of Marginal Relief

From 1st. April 2015 a unified corporation tax rate of 20% will apply for all taxable profits, bringing marginal relief to an end.

Historical Rates of Marginal Relief from 1973
 

Year Threshold Greater Than Threshold Maximum Divide by Multiply by Standard Rate of Corporation Tax
1973 25,000 40,000 300 50 52%
1974 25,000 40,000 300 50 52%
1975 40,000 60,000 400 60 52%
1976 50,000 65,000 400 64 52%
1977 60,000 85,000 350 50 52%
1978 70,000 100,000 400 60 52%
1979 80,000 130,000 400 56 52%
1980 90,000 200,000 400 32 52%
1981 100,000 225,000 400 32 52%
1982 100,000 500,000 400 14 52%
1983 100,000 500,000 400 20 50%
1984 100,000 500,000 400 15 45%
1985 100,000 500,000 400 10 40%
1986 100,000 500,000 400 6 35%
1987 100,000 500,000 400 8 35%
1988 100,000 500,000 400 10 35%
1989 150,000 750,000 400 10 35%
1990 200,000 1,000,000 400 9 34%
1991 250,000 1,250,000 400 8 33%
1992 250,000 1,250,000 400 8 33%
1993 250,000 1,500,000 400 8 33%
1994 300,000 1,500,000 400 8 33%
1995 300,000 1,500,000 400 8 33%
1996 300,000 1,500,000 400 9 33%
1997 300,000 1,500,000 400 10 31%
1998 300,000 1,500,000 400 10 31%
1999 300,000 1,500,000 400 10 30%
2000 300,000 1,500,000 400 10 30%
2001 300,000 1,500,000 400 10 30%
2002 300,000 1,500,000 400 19 30%
2003 300,000 1,500,000 400 19 30%
2004 300,000 1,500,000 400 19 30%
2005 300,000 1,500,000 400 19 30%
2006 300,000 1,500,000 400 11 30%
2007 300,000 1,500,000 400 10 30%
2008 300,000 1,500,000 400 7 28%
2009 300,000 1,500,000 400 7 28%
2010 300,000 1,500,000 400 7 28%
2011 300,000 1,500,000 400 6 26%
2012 300,000 1,500,000 400 4 24%
2013 300,000 1,500,000 400 3 23%
2014 300,000 1,500,000 400 1 21%

Figurewizard and Marginal Relief

Our system automatically calculates and applies corporation tax to all of our profit, liquidity and cash flow forecasts. You can view working examples of all of these forecasts by clicking on "sample forecasts" on the menu bar above this article.

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