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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the scope of corporation tax, including close companies and investment companies

For the financial year 2025, which statement correctly describes the corporation tax rates and limits that apply to a stand-alone UK company (no associated companies) with a 12-month accounting period?

For the financial year 2025 a stand-alone company pays 19% where augmented profits are £50,000 or less and 25% where they are £250,000 or more. Between these limits the main rate applies, reduced by marginal relief, which gives a gradual increase in the effective rate.

  1. ASmall profits rate 19% where profits are £50,000 or less, main rate 25% where profits are £250,000 or more, with marginal relief between these limitsCorrect
  2. BSmall profits rate 19% where profits are £100,000 or less, main rate 25% where profits are £500,000 or more, with marginal relief between these limits
  3. CSmall profits rate 25% where profits are £50,000 or less, main rate 19% where profits are £250,000 or more, with marginal relief between these limits
  4. DA single flat rate of 25% applies to all profits, with no small profits rate or marginal relief

Explanation

The tax rates table gives a small profits rate of 19% with a lower limit of £50,000, and a main rate of 25% with an upper limit of £250,000. Marginal relief applies to profits between the two limits. Option B uses incorrect limits and option C reverses the rates.

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