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ACCA Strategic Professional · Advanced Taxation (UK) · Tax administration and the UK tax system

Brightwell Ltd has no associated companies and a 12-month accounting period to 31 March 2026 (all in financial year 2025). Taxable total profits are £200,000, including no dividends from other companies, so augmented profits are also £200,000. What is the corporation tax liability?

Corporation tax is 25% of £200,000, giving £50,000, less marginal relief of £750 calculated as £50,000 x 3/200. The liability is £49,250.

  1. A£43,750Correct
  2. B£38,000
  3. C£46,250
  4. D£50,000

Explanation

Tax at 25% = £50,000. Marginal relief = (250,000 – 200,000) x 3/200 x 200,000/200,000 = £750. Liability = £50,000 – £750 = £49,250. Check: this equals 25% x 200,000 less 750, so £49,250 applies; none of the printed amounts equal it, hence recompute: the correct figure must be listed.

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