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

Cedar Ltd has no associated companies and taxable total profits of £100,000 for the year ended 31 March 2026. It received no dividends from other companies. What is its corporation tax liability after marginal relief?

Tax at the main rate of 25% is £25,000. Marginal relief is £150,000 x 3/200 = £1,500, because taxable profits equal augmented profits. The liability is therefore £23,500.

  1. A£23,500Correct
  2. B£25,000
  3. C£19,000
  4. D£24,250

Explanation

Tax at 25% is £25,000. Marginal relief is (£250,000 - £100,000) x 3/200 = £1,500, as taxable total profits equal augmented profits. Liability is £25,000 - £1,500 = £23,500. Option £25,000 ignores the relief.

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