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

Calder Ltd has a 12-month period with no associated companies. It has trading profits of £180,000. It has a chargeable gain of £60,000 on one disposal and an allowable capital loss of £10,000 on another disposal in the same period. It also has unrelieved capital losses of £25,000 brought forward. There is no other income. Using the financial year 2025 rates, what is the corporation tax liability?

The liability is £50,575. Net gains after the current-year loss and the brought forward loss are £25,000, so taxable total profits are £205,000. Tax at 25% is £51,250. Marginal relief of £675 applies, since £250,000 − £205,000 = £45,000 × 3/200.

  1. A£50,575Correct
  2. B£57,200
  3. C£51,250
  4. D£43,950

Explanation

Current-year loss is set off first: £60,000 − £10,000 = £50,000. Brought forward losses reduce this to £25,000. Taxable total profits are £180,000 + £25,000 = £205,000, which lies between £50,000 and £250,000. Tax at 25% is £51,250, less marginal relief £45,000 × 3/200 = £675, giving £50,575. £57,200 ignores the brought forward loss, £51,250 omits marginal relief, and £43,950 omits the gain.

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