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

Harbour Ltd, a UK resident trading company with no associated companies, has a 12-month accounting period ended 31 March 2026. It has taxable total profits of £40,000 and no franked investment income. Using the rates in the Finance Act 2025 tax tables, what is its corporation tax liability?

The liability is £7,600. Augmented profits of £40,000 are below the £50,000 lower limit, so the 19% small profits rate applies to all the taxable total profits, and £40,000 x 19% gives £7,600.

  1. A£7,600Correct
  2. B£10,000
  3. C£6,000
  4. D£8,400

Explanation

Augmented profits of £40,000 are below the lower limit of £50,000, so the small profits rate of 19% applies. £40,000 x 19% = £7,600. Using the main rate of 25% would give £10,000, but that rate only applies where profits reach the upper limit of £250,000.

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