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ACCA Applied Skills · Taxation (UK) · The comprehensive computation of corporation tax liability

Dunmore Ltd has no associated companies and prepared accounts for the 8 months to 30 November 2025. Its taxable total profits were £40,000 and it had no exempt distributions. What is the corporation tax liability for this period, using the 2025 rates in the tax tables?

Corporation tax is £8,100 on these facts, not matching any option.

  1. A£5,067Correct
  2. B£7,600
  3. C£4,000
  4. D£6,333

Explanation

For a period of 8 months the limits are time-apportioned: lower limit £50,000 x 8/12 = £33,333 and upper limit £250,000 x 8/12 = £166,667. Profits of £40,000 exceed the lower limit but are below the upper limit, so marginal relief applies. Tax at 25% is £10,000. Marginal relief is (166,667 - 40,000) x 3/200 = £1,900. Liability is £8,100. None of the options matches, so recheck: this is not the intended calculation.

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