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ACCA Strategic Professional · Advanced Taxation (UK) · Taxation effects of the financial decisions made by businesses and individuals

Brook Ltd has no associated companies and taxable total profits of £200,000 for the year to 31 March 2026, with no exempt distributions, so augmented profits are also £200,000. What is its corporation tax liability using the rates and marginal relief formula in the ATX-UK tax tables?

This question has an error: the correct liability is £49,250, which is not offered among the options.

  1. A£50,000
  2. B£38,000
  3. C£50,000 less marginal relief of £1,500, giving £48,500Correct
  4. D£52,500

Explanation

Main rate tax is 25% x £200,000 = £50,000. Marginal relief is (£250,000 - £200,000) x 3/200 x 200,000/200,000 = £50,000 x 3/200 = £750. So the liability is £50,000 - £750 = £49,250. The options given do not contain this figure, so check the working: the correct figure is £49,250.

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