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A company is 鈥榣arge鈥� for the purposes of quarterly instalment payments if its profits for an accounting period exceed the 鈥渦pper limit鈥� in force at the end of the accounting period. The way in which the 鈥渦pper limit鈥� is arrived at changed for accounting periods ending on or after 1 April 2015.

For accounting periods beginning on or after 1 April 2019, the definition of a large company has been modified by SI 2017/1072 to one that has taxable profits in an AP of more than 拢1.5m but do not exceed 拢20m. If a company has taxable profits exceeding 拢20m, it is defined as a 鈥榲ery large company鈥� and will be required to make all its instalment payments in the AP to which its liability relates. See CTM92795 onwards.

Accounting periods beginning before 1 April 2015

For accounting periods beginning before 1 April 2015, the 鈥渦pper limit鈥� was the CTA10/S24 amount of the upper relevant maximum amount (URMA) in force at the end of the accounting period. For financial years up to 2014, this was 拢1,500,000. As with CTA10/S24:

• 鈥楶rofits鈥� means profits chargeable to CT plus franked investment income received other than from a company in the same group;
• The upper limit is reduced proportionately when the accounting period is less than twelve months;
• The upper limit when the company has associated companies is reduced by dividing it by the total number of companies associated, including the reference company.

In considering the number of associated companies, follow the guidance at CTM03570.

Accounting periods beginning between 1 April 2015 and 31 March 2023

For accounting periods beginning on or after 1 April 2015 to 31 March 2023, the 鈥渦pper limit鈥� is set by SI1998/3175 (as amended by SI2014/2409) at 拢1,500,000. The 鈥渦pper limit鈥� is adjusted as follows:

• 鈥榩rofits鈥� means profits chargeable to CT plus any exempt ABGH distributions received other than from a company in the same group,
• the 鈥渦pper limit鈥� reduces proportionately when the accounting period is less than twelve months,
• the 鈥渦pper limit鈥� is reduced by dividing the number of related 51 per cent group companies, including the reference company.

A related 51 per cent group company is defined in CTA10/S279F to S279H. For this purpose, 鈥淎鈥� is a related 51 per cent group company of 鈥淏鈥� if:

• A is a 51 per cent subsidiary of B,
• B is a 51 per cent subsidiary of A, or
• A and B are 51 per cent subsidiaries of the same company.

鈥�51 per cent subsidiary鈥� takes its meaning from CTA10/S1154, that is, A is a 51 per cent subsidiary of B if more than 50 per cent of its ordinary share capital is beneficially owned (directly or indirectly) by B.

Two companies are related 51 per cent group companies of a company even if they are related 51 per cent group companies for different parts of that company鈥檚 accounting period. For example, company C has an accounting period from 1 April 2015 to 31 March 2016. A is a 51 per cent subsidiary of C from 1 April 2015 to 30 June 2015. B is a 51 per cent subsidiary of C from 1 July 2015 to 31 March 2016. A and B are both related 51 per cent group companies of C for its accounting period from 1 April 2015 to 31 March 2016.

A related 51 per cent group company is ignored if it did not carry on a trade or business during the accounting period, or if it was only a related group company for part of an accounting period, if it did not carry on a trade or business in that part of the accounting period. Whether a trade or business is carried on should be decided on the same basis as for associated companies, and the guidance at CTM03590 should be followed.

Accounting periods beginning on or after 1 April 2023

For accounting periods beginning on or after 1 April 2023 the 鈥渦pper limit鈥� remains as set by SI 1998/3175 but reverts back to being proportionately reduced by the number of associated companies a company has.

Guidance on associated companies is at CTM03940.

Exclusions

A company is not 鈥榣arge鈥� if its total liability does not exceed 拢10,000. This limit is proportionately reduced if the accounting period is less than 12 months.

Example 1 is a case that is not 鈥榣arge鈥� because of the level of profits.

Example 2 is a case that is not 鈥榣arge鈥� because its total liability does not exceed 拢10,000 although its profits are more than the upper limit.

Example 1

• Company A has five associated companies. Its profits for the 12 month accounting period ended 30 November 2011 are 拢200,000 and the tax liability 拢56,000.
• Company A is not a large company for this accounting period because its profits do not exceed the upper limit of 拢1,500,000 / 6 [1 + 5] = 拢250,000.

Example 2

• Company B has five 51 per cent related group companies. Its profits for the 12 month accounting period to 31 December 2016 are 拢260,000 and the tax liability 拢9,500.
• Company B is not a large company for this accounting period. Although its profits exceed the upper limit its tax liability does not exceed 拢10,000.