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ACCA Applied Skills · Taxation (UK) · The scope of corporation tax

Delta Ltd is a UK resident trading company with no associated companies. For the 12-month period ended 31 March 2026 it has taxable total profits of £200,000, which includes no dividends. It also received dividends of £20,000 from a 30% shareholding in an unconnected UK company. The company is not a member of a group. Which of the following is Delta Ltd's augmented profits?

Augmented profits are £220,000. They equal taxable total profits of £200,000 plus the £20,000 of dividends from an unconnected UK company, because such dividends are exempt from corporation tax but still count when deciding which corporation tax rate or marginal relief applies.

  1. A£200,000
  2. B£210,000
  3. C£220,000Correct
  4. D£180,000

Explanation

Augmented profits are taxable total profits plus exempt dividends received from non-group companies. The dividends of £20,000 are not in taxable total profits, so augmented profits are £200,000 + £20,000 = £220,000. Option £200,000 ignores the dividends. Option £180,000 wrongly deducts them.

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