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ACCA Applied Skills · Taxation (UK) · The use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Arden Ltd has no associated companies and a 12-month period to 31 March 2026 (financial year 2025). Its taxable total profits are £150,000, which include no exempt ABGH distributions. What is the marginal relief?

Marginal relief is £1,500. It is the £100,000 gap between the £250,000 upper limit and augmented profits of £150,000, multiplied by the standard fraction of 3/200. The profit ratio is one because there are no exempt distributions.

  1. A£1,500Correct
  2. B£15,000
  3. C£1,000
  4. D£3,000

Explanation

Marginal relief = (upper limit - augmented profits) x standard fraction x taxable total profits/augmented profits. This is (250,000 - 150,000) x 3/200 x 150,000/150,000 = 100,000 x 0.015 = £1,500. Using £15,000 would come from omitting the 3/200 fraction incorrectly scaled.

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