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

Harbour Ltd, a UK resident company, has the following for the 12 months to 31 March 2026: adjusted trading profit £180,000, non-trading loan relationship interest receivable £10,000, a chargeable gain £20,000, dividends of £15,000 received from an unconnected UK company, and a qualifying charitable donation paid of £5,000. What are Harbour Ltd's taxable total profits?

Taxable total profits are £205,000: trading profit £180,000 plus loan relationship interest £10,000 plus the gain £20,000, less the £5,000 qualifying donation. The £15,000 UK dividends are exempt and are excluded from taxable total profits, although they count within augmented profits.

  1. A£205,000Correct
  2. B£220,000
  3. C£210,000
  4. D£185,000

Explanation

Taxable total profits = 180,000 + 10,000 + 20,000 = 210,000, less the donation of 5,000 = 205,000. Dividends from unconnected UK companies are exempt and excluded from taxable total profits (they only enter augmented profits). £220,000 wrongly includes the dividends; £210,000 omits the donation; £185,000 omits the gain.

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