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

For the financial year 2025, which statement correctly describes the corporation tax rates and limits that apply to a standalone company with no associated companies?

The 19% small profits rate applies where profits are at or below £50,000, and the 25% main rate applies where profits exceed £250,000. Between those limits the main rate applies but marginal relief reduces the tax, giving a gradual increase in the effective rate.

  1. ASmall profits rate of 19% up to £50,000, main rate of 25% above £250,000, and marginal relief between these limitsCorrect
  2. BSmall profits rate of 19% up to £250,000 and main rate of 25% above that figure, with no marginal relief
  3. CSmall profits rate of 19% up to £50,000 and main rate of 25% on all profits above £50,000
  4. DSmall profits rate of 25% up to £50,000 and main rate of 19% above £250,000, with marginal relief between

Explanation

For FY2025 the small profits rate is 19% (lower limit £50,000) and the main rate is 25% (upper limit £250,000). Profits between the limits get marginal relief, so the effective rate rises gradually. Option 2 ignores marginal relief and uses the wrong limit for the 19% rate.

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