The problem a group actually has
A single pharmacy owner usually knows how the business is doing. A group owner often does not, because central costs are apportioned on a basis nobody has revisited since the second site opened, and the branch that feels busiest is not always the one that earns.
We rebuild it from the reimbursement up: NHS income by stream per branch, staff cost per branch including locum cover, and central overhead apportioned on a basis you have actually agreed. It regularly changes which site an owner thinks is the problem.
The tax point groups discover late
Under s18E, companies are associated where one controls the other or both are under common control, with control taking its close company meaning. A company counts if it was associated for any part of the period, and residence is irrelevant. It is ignored only if it carried on no trade or business at all in the period. If your group grew by acquiring companies rather than opening branches, this is worth checking before the period ends rather than after.
Common questions
How does owning more than one company affect corporation tax?
It divides the limits, and this is the fact most groups discover late. The £50,000 and £250,000 thresholds are divided by one plus the number of associated companies under CTA 2010 s18D(3). With three other associated companies the limits become £12,500 and £62,500, so profits that would have been taxed at 19% in a standalone company sit in the marginal band at an effective 26.5%. gov.uk uses exactly that example. If your group has grown by acquiring companies rather than branches, check this before your next accounting period ends.
What counts as an associated company?
Under CTA 2010 s18E, two companies are associated at any time when one controls the other, or both are under the control of the same person or persons, with control taking its close company meaning in ss450–451. A company counts if it was associated for any part of the period, and residence is irrelevant — an overseas company still counts. A company is ignored if it has not carried on a trade or business at any time in the period, and passive holding companies are excluded by s18F on strict conditions.
Which branches are actually earning?
That is the question a group should be able to answer monthly and usually cannot, because central costs are apportioned in a way nobody has revisited since the second site opened. We build it from the reimbursement up: NHS income by stream per branch, staff cost per branch including locum cover, and central overhead apportioned on a basis you have agreed rather than inherited. It regularly changes which site an owner thinks is the problem. The branch that feels hardest to run is often carrying the most central cost rather than earning the least, and until the apportionment is explicit you cannot tell those two apart.
Does hub and spoke help a small group?
It can, but only in one form. The 2025 legislation permits Model 1 — dispensing between pharmacies within the same legal entity. Model 2, between separate legal entities, is not lawful. If your group is structured as several companies rather than one, that distinction decides whether hub and spoke is available to you at all, and it is worth establishing before you plan an operating model around it rather than after. If the group is currently several companies and hub and spoke matters to you commercially, that is an argument for looking at the structure — but weigh it against the associated companies point above, because consolidating for one reason can change your corporation tax position for another.
What about acquiring more pharmacies?
Beyond the deal itself there is a registration step people miss. If you are acquiring more than ten pharmacies the GPhC asks you to email its premises team before applying. And every individual acquisition still carries the s74H duty: the incoming owner must notify the registrar within 28 days or the premises entry ceases to be valid. Ten acquisitions means ten of those, each with its own clock. Group them badly and you will have three registration deadlines and a reg 26 determination running at once, which is how a well-funded acquisition turns into a month when two of the branches cannot legally trade.