Transfer pricing calculator
Test a related-party price, margin, interest rate or fee against comparables, or value a business or an intangible, and see the adjustment to taxable profit. An estimate, not advice.
The calculator needs JavaScript. Each model is explained below, with a worked example you can follow by hand.
Result
Choose a model and enter the figures: the result appears here as you type.
- Comparables read
- Lowest
- Lower quartile
- Median
- Upper quartile
- Highest
- Arm’s length range used
- to
- Arm’s length price range
- to
- Result in the transaction
- Price charged
- Residual profit to split
- The business’s share of it
- Arm’s length profit for the business
- Profit actually made
- Interest at the rate charged
- Benefit to the borrower (yield approach)
- Guarantor’s cost
- Fee at the rate charged
- Costs marked up
- Mark-up
- Pass-through costs, at cost
- Charge at cost plus 5%
- Amount charged
- Forecast years, discounted
- Terminal value, discounted
- Less net debt
Inside the arm’s length range: no adjustment.
Below the arm’s length range.
Above the arm’s length range.
The profit made matches the arm’s length share.
The profit made differs from the arm’s length share.
In line with the simplified approach: no adjustment.
Not in line with the simplified approach.
Adjustment to taxable profit
Adjustment to taxable profit
£0.00
Arm’s length value
- Arm’s length point used
- Price at that point
- Interest at that rate
- Fee at that rate
- In the business’s favour
- Value at a discount rate of
- Value at a discount rate of
- Price agreed
- Price below the value by
- Price above the value by
Have an accountant check the analysis.
A result is only as reliable as the method and the comparables behind it. We can review the functional analysis, the choice of method, the comparables and the adjustment, and prepare working papers for each. The fee is fixed and agreed with you in writing before we start.
Nothing you entered here is sent to us: you choose what to share.
Notes
- line(s) of the comparables had no figure and were left out.
- Enter the comparables’ results to see the range.
- Fewer than four comparables: a range from so few results says little, and is unlikely to be accepted without more support.
- No number of units was entered, so the adjustment is for one unit.
- No number of months was entered, so a full year is used.
- No share was entered, so all of the cost is allocated to this recipient.
- The base for the profit level indicator must be above nil: a margin cannot be worked out on nothing.
- Enter each party’s contribution, measured the same way, to split the profit.
- The routine returns are more than the combined profit, so there is a residual loss, and it is shared by the same contributions.
- The related party is the tested party, so the adjustment is the opposite of its own: its profit above the range is profit the business should have had.
- With no lower rate from the guarantee, the borrower gets no benefit from it, so an independent borrower would pay no fee for it.
- The guarantor’s cost is more than the borrower saves, so no fee works for both: an independent guarantor would not give this guarantee on these terms.
- The discount rate must be above the long-term growth rate for a terminal value to exist.
- A discount rate one point lower would not be above the growth rate, so only the higher rate is shown.
- The charge is above cost plus 5%. That does not make it wrong, but the simplified approach no longer supports it: the excess needs its own evidence, such as a benchmark of the services, or it may not be deductible.
- The charge is below cost plus 5%, so the recipient has nothing to adjust. The provider may be under-charging.
- The business sold for less than the value. The difference may be taxed as if the price had been the value, for example as a larger gain.
- The business paid more than the value. The excess may not be allowed as a cost, for example in the base cost of the asset or its amortisation.
- A value is an estimate within a range, and the range one point either side of the discount rate shows how much it depends on that rate. Forecasts must be those available at the time of the transfer, not ones made with hindsight.
- The UK rules increase the taxable profit by this amount in the Corporation Tax computation, where the provision gives a UK tax advantage. Where the other party is also within UK tax and the rules apply to it, it can usually claim a matching reduction, within two years of the return made on the arm’s length basis.
- The result is in the business’s favour. The UK rules only ever increase UK taxable profit, so they make no adjustment here. Any relief would come from the other country’s tax authority, or through the mutual agreement procedure of a tax treaty.
- Small and medium-sized enterprises are generally outside the UK rules, unless the other party is resident in a territory without a UK tax treaty that has a non-discrimination article, or HMRC gives a medium-sized enterprise a notice. And from periods starting on or after 1 January 2026, most dealings between UK companies taxed at the same rate are exempt.
An estimate on the figures you enter, under the UK rules as they stood on the date at the top of this page. It is not advice, and it does not replace a transfer pricing analysis of the facts.
The calculator tests one transaction between connected parties against what independent businesses would have agreed, under the UK rules in force on 2 November 2026. Choose a model, enter the transaction’s figures and the comparables’ results, and it shows the arm’s length range, where the transaction falls, and the adjustment to taxable profit. Every line has a “?” that explains it and cites the law and guidance. It is an estimate on the figures you enter, not advice.
Before using it, check that the rules apply at all. Most small and medium-sized enterprises are outside them, and so, from 2026, are most dealings between UK companies taxed at the same rate. Our guide to UK transfer pricing sets out the tests.
How the calculator works
- Choose the model. The five methods in the OECD Transfer Pricing Guidelines, three models for common intra-group transactions, and two valuation models.
- Enter the transaction. Which side the business is on, and the price, margin, rate or profit in the related-party transaction.
- Enter the comparables. Paste the results of comparable independent transactions or companies, one per line, straight from a spreadsheet if you like. The calculator sorts them and works out the quartiles and the median.
- Read the result. The range, whether the transaction is inside it, and if not, the adjustment that moves it to the median or to the nearer end of the range, as you choose.
HMRC sets no formula for quartiles. The calculator uses linear interpolation between the sorted results, the method of Excel’s QUARTILE.INC, so its figures match a spreadsheet that uses that function. Results near a quartile can differ slightly under another method.
Each figure is entered as a plain number. Percentages are entered as percentages, so 4.5 means 4.5%. A loss, or a negative margin, is entered with a minus sign.
The models
| Model | What it tests | Typical use |
|---|---|---|
| Comparable uncontrolled price | The price, or a rate such as a royalty, against the same thing between independent parties | Commodities, standard goods, licences, interest |
| Resale price method | The reseller’s gross margin | A distributor buying from a related supplier |
| Cost plus method | The supplier’s gross mark-up on its costs | A contract manufacturer or service provider |
| Transactional net margin method | A net profit indicator of the less complex party | Distributors, manufacturers and service providers, where only company-level data exists |
| Profit split | Each party’s share of the combined profit | Integrated operations where both parties contribute something unique |
| Intra-group loan | The interest rate | Loans between group companies |
| Financial guarantee | The guarantee fee, by the yield approach | A parent guaranteeing a subsidiary’s bank debt |
| Low value-adding services | The charge at cost plus 5% | Accounting, HR, IT and similar support |
| Discounted cash flow | The value of what is transferred | A business, shares or an asset sold within the group |
| Relief from royalty | The value of an intangible | A brand or technology transferred within the group |
A worked example
These figures are for illustration only. A UK company distributes products bought from its parent abroad. Its revenue for the year is £10 million and its operating profit £200,000, an operating margin of 2%. A benchmarking search finds five comparable independent distributors, with operating margins of 3%, 4%, 5%, 6% and 7%.
| Step | |
|---|---|
| Lower quartile of the comparables | 4.00% |
| Median | 5.00% |
| Upper quartile | 6.00% |
| The company’s operating margin | 2.00% |
| Below the range, so moved to the median | 5.00% |
| Arm’s length operating profit: 5% of £10 million | £500,000 |
| Adjustment to taxable profit | £300,000 |
The adjustment is added to the company’s taxable profit in its Corporation Tax computation. Moving only to the lower quartile, the nearer end, would give £200,000; HMRC’s guidance points to the median.
HMRC and the arm’s length range
A result inside the range needs no adjustment. For a result outside it, HMRC’s guidance says the median is usually the best point to adjust to, because it is the most likely to fall within the true arm’s length range. HMRC does not require the interquartile range: it accepts it where some comparability defects remain and there are enough results, and the full range where every comparable is closely comparable. It also says that no statistic can rescue a poor set of comparables.
What happens to the adjustment
The UK rules only ever increase UK taxable profit, or reduce a loss. An upward adjustment is made in the company’s own Corporation Tax computation. Where the other party is also within UK tax and the rules apply to it, it can usually claim a matching reduction, within two years of the return made on the arm’s length basis.
If the result is in the company’s favour, the UK rules make no adjustment. Relief for any double taxation would come from the other country’s tax authority, or through the mutual agreement procedure of a tax treaty.
What the calculator leaves out
- Whether the rules apply. The SME exemption, the UK-to-UK exemption and the participation condition are tests of fact, set out in our guide.
- The functional analysis. Which party is tested, which method fits and whether the comparables are truly comparable are judgements on the facts.
- The benchmarking search. It does not find or check comparables, or make working capital or other comparability adjustments: enter results already adjusted.
- Thin capitalisation. The loan model prices the interest rate, not whether the company could and would have borrowed that much, and it does not apply the Corporate Interest Restriction.
- The tax on the adjustment, which depends on the company’s rate and its other profits.
- The charge on unassessed transfer pricing profits, which HMRC assesses separately, and the new International Controlled Transactions Schedule.
Where any of these matters, the result is a starting point only.
Common questions
Is this an HMRC calculator?
No. It is an independent tool from Linx Accounting, which is not connected with HMRC. It applies the methods in the OECD Transfer Pricing Guidelines, which UK law follows, and HMRC's published guidance on the arm's length range, as they stood on the date at the top of this page. The result is an estimate on the figures entered, not advice, and it does not replace a transfer pricing analysis.
Where do the comparables come from?
From a benchmarking search of a commercial database of company accounts, from published licence or loan data, or from the business's own dealings with independent parties. Each comparable must be similar enough in its functions, risks, products and market, or adjusted for the differences. The calculator takes the results you enter; it does not find or check the comparables.
Do I need this if my company is small?
Perhaps not. Small and medium-sized enterprises, measured with the rest of their group, are generally outside the UK transfer pricing rules, unless they deal with a party in a territory without a suitable UK tax treaty, or HMRC gives a medium-sized enterprise a notice. And from 2026 most dealings between UK companies taxed at the same rate are exempt. Our guide to UK transfer pricing sets out the tests.
Does the calculator keep or send the figures I enter?
No. The calculation runs in your browser. The figures and comparables you enter are not sent to us or to anyone else, and they are not saved: reloading or closing the page clears them. If you would like us to look at them, send them to us yourself on WhatsApp or by email.
Related
Transfer pricing
Pricing dealings between connected companies at arm's length: who the UK rules reach, the methods and the records.
Corporation Tax
Corporation Tax computations and CT600 returns for limited companies, prepared from the year-end accounts and filed in iXBRL.
HMRC compliance checks
What an HMRC compliance check involves, why records matter, and where specialist enquiry help sits.
Talk to us about what you need
Tell us what you have to do and by when. We will explain what is involved and send you a fixed-fee quote, agreed in writing before any work starts.