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ACCA Applied Skills · Taxation (UK) · The effect of a group corporate structure for corporation tax purposes

Crest Ltd has a 12-month period to 31 March 2026 with taxable total profits of £90,000 and no dividend income. It has two associated companies. It also has a 40% shareholding in an overseas company that Crest Ltd does not control, which is not associated. What are the corporation tax limits (lower and upper) applied to Crest Ltd?

The limits are £16,667 and £83,333. Crest Ltd has two associated companies, giving three companies in total, so both the £50,000 lower limit and £250,000 upper limit are divided by three. The uncontrolled overseas holding is not associated.

  1. A£16,667 and £83,333Correct
  2. B£12,500 and £62,500
  3. C£25,000 and £125,000
  4. D£50,000 and £250,000

Explanation

Crest Ltd has two associated companies, so with itself there are three companies. Limits are divided by 3: £50,000/3 = £16,667 and £250,000/3 = £83,333. The £25,000 and £125,000 option divides by 2. The £12,500 option divides by 4.

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