Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects

Dunmore Ltd has no associated companies, and a 12-month accounting period to 31 March 2026. It has taxable total profits of £180,000 and receives dividends of £20,000 from unrelated UK companies, so augmented profits are £200,000. What is its corporation tax liability?

Tax at 25% on £180,000 is £45,000. Marginal relief uses augmented profits of £200,000: £50,000 x 3/200 x 180/200 = £675. The liability is £44,325.

  1. A£44,325Correct
  2. B£45,000
  3. C£44,250
  4. D£44,775

Explanation

Tax at 25% on taxable total profits of £180,000 is £45,000. Marginal relief is (£250,000 - £200,000) x 3/200 x 180,000/200,000 = £750 x 0.9 = £675. Liability is £45,000 - £675 = £44,325. Option £44,250 wrongly uses £750 with no profit ratio adjustment and arithmetic slip.

Did you get it right without looking?

One question tells you little. A timed set on Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects shows your real accuracy, how long you take and where you lose marks.

Practise Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspectsFree diagnostic mock

More Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects questions