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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Harlow Ltd has no associated companies and a 12-month accounting period in the financial year 2025. Its taxable total profits are £180,000, which include no dividends. What is its corporation tax liability after marginal relief?

Tax at 25% is £45,000, less marginal relief of £1,050 (£70,000 × 3/200), giving £43,950.

  1. A£45,000
  2. B£40,500
  3. C£42,000Correct
  4. D£37,500

Explanation

Tax at 25% is £45,000. Marginal relief is (£250,000 − £180,000) × 3/200 × (£180,000/£180,000) = £70,000 × 0.015 = £1,050... recalculated: 70,000 × 3/200 = £1,050. Liability is £45,000 − £1,050 = £43,950. Re-checking the options, none match, so the stated key is invalid.

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