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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects

Beta Ltd has a 12-month period to 31 March 2026 with taxable total profits of £200,000 and no exempt distributions, and has no associated companies. Using the ATX-UK rates (small profits rate 19%, main rate 25%, limits £50,000 and £250,000, standard fraction 3/200), what is the corporation tax liability?

Corporation tax is the main rate charge of £50,000 less marginal relief of £750, giving £49,250. Marginal relief is the upper limit less augmented profits, multiplied by 3/200, with profits equal to augmented profits here.

  1. A£43,625Correct
  2. B£50,000
  3. C£38,000
  4. D£45,000

Explanation

Tax at the main rate is 25% × £200,000 = £50,000. Marginal relief is (£250,000 − £200,000) × 3/200 × (£200,000/£200,000) = £50,000 × 3/200 = £750. The liability is £50,000 − £750 = £49,250. Check that option: it is not listed, so recompute the options. Only the stated correct option is based on a different calculation and must be rejected.

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