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ACCA Applied Skills · Taxation (UK) · Taxable total profits

Delta Ltd has no associated companies and prepares accounts for the 6 months to 30 September 2025. Taxable total profits are £30,000 with no franked investment income. What is the effect of the limits for this period?

For a six-month period the limits are halved to £25,000 and £125,000. Profits of £30,000 fall between them, so the main rate applies with marginal relief rather than the small profits rate or the full main rate.

  1. AThe small profits rate of 19% applies because profits are below the £25,000 lower limit
  2. BThe small profits rate applies because profits of £30,000 are below the lower limit of £50,000
  3. CThe lower limit is £25,000 and the upper limit £125,000, so marginal relief appliesCorrect
  4. DThe main rate of 25% applies because profits exceed £25,000

Explanation

For a 6-month period the limits are time apportioned: lower £50,000 x 6/12 = £25,000 and upper £250,000 x 6/12 = £125,000. Profits of £30,000 lie between them, so marginal relief applies. Marginal relief = (125,000 - 30,000) x 3/200 = 1,425, so tax is 7,500 - 1,425 = 6,075.

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