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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Brindle Ltd, a UK company, has taxable total profits of £60,000 and receives exempt dividends of £30,000 from an unconnected UK company. It has no associated companies and a 12-month period in financial year 2025. What is its corporation tax liability?

Augmented profits are £90,000, tax at 25% is £15,000, and marginal relief is £1,600, giving £13,400.

  1. A£11,400
  2. B£12,300Correct
  3. C£10,500
  4. D£15,000

Explanation

Augmented profits = £60,000 + £30,000 = £90,000. Tax at 25% = £15,000. Marginal relief = (£250,000 − £90,000) × 3/200 × (£60,000/£90,000) = £160,000 × 0.015 × 0.6667 = £1,600. Liability = £13,400, which matches no option, so the keyed option is unsupported.

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