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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Dunmore Ltd has no associated companies and a 12-month accounting period in the financial year 2025. It has taxable total profits of £200,000, made up of trading profits of £170,000 and chargeable gains of £30,000. It received no dividends. What is its corporation tax liability?

Tax at 25% is £50,000 less marginal relief of £750, giving £49,250.

  1. A£50,000
  2. B£47,750Correct
  3. C£48,500
  4. D£46,250

Explanation

Tax at 25% on £200,000 is £50,000. Marginal relief is (£250,000 − £200,000) × 3/200 = £50,000 × 0.015 = £750, as taxable total profits equal augmented profits. Liability is £50,000 − £750 = £49,250. This does not match any option, so the stated key is invalid.

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