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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: taxable total profits

For its year ended 31 March 2026 Lorne Ltd has a trading loss of £60,000, property income of £25,000 and a chargeable gain of £15,000. It paid a qualifying charitable donation of £10,000 and claims to set the trading loss against total profits of the same period. Which statement is correct?

Taxable total profits are nil. The loss claim is made before the charitable donation and absorbs the £40,000 of property income and gains, leaving £20,000 of loss to carry forward. The £10,000 donation then has no profits to relieve and cannot be carried forward.

  1. ATaxable total profits are nil, the £10,000 donation is deducted first and the loss carried forward is £30,000
  2. BTaxable total profits are nil, the donation is unrelieved, and £20,000 of the loss remains to carry forwardCorrect
  3. CTaxable total profits are nil, the donation is carried forward with a loss carried forward of £20,000
  4. DTaxable total profits are £30,000 because the loss cannot be set against chargeable gains

Explanation

Total profits before reliefs are £25,000 + £15,000 = £40,000. The current-year loss claim is deducted before qualifying charitable donations, absorbing all £40,000, leaving £20,000 of loss to carry forward. The donation then has no profits to relieve and is wasted, since donations cannot be carried forward.

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