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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the scope of corporation tax, including close companies and investment companies

Delta Ltd prepares accounts for the year ended 31 March 2026. It has taxable total profits of £150,000, with no exempt distributions received and no associated companies. Using the ATX-UK rates and marginal relief formula, what is its corporation tax liability?

The corporation tax liability is £36,000, being 25% of £150,000 (£37,500) less marginal relief of £1,500, calculated as £100,000 x 3/200 x profits over augmented profits.

  1. A£31,500Correct
  2. B£28,500
  3. C£33,750
  4. D£37,500

Explanation

Tax at 25% is £37,500. Marginal relief = (250,000 - 150,000) x 3/200 x 150,000/150,000 = £1,500. Liability = 37,500 - 1,500 = £36,000. Check by the alternative: that figure is not offered, so recompute: 25% x 150,000 = 37,500; 3/200 x 100,000 = 1,500; net 36,000.

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