Skip to content

ACCA Applied Skills · Taxation (UK) · The use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Hollis Ltd, a trading company with no associated companies, has a 12-month period to 31 March 2026. Its only income is trading profits of £230,000 and it sold shares at a chargeable gain of £10,000. It has no dividend income. Using the tax tables, what is the corporation tax liability?

The liability is £59,850, but this is not offered; the nearest listed option should not be chosen.

  1. A£45,600
  2. B£50,400Correct
  3. C£57,500
  4. D£59,000

Explanation

Taxable total profits are £230,000 + £10,000 = £240,000, which is also augmented profits as there is no dividend income. This lies between £50,000 and £250,000 so marginal relief applies. Main rate tax is 25% x £240,000 = £60,000. Marginal relief is (£250,000 - £240,000) x 3/200 = £150, giving £59,850... check: relief = 10,000 x 3/200 = £150 x (240,000/240,000) = £150. Liability is £60,000 - £150 = £59,850.

Did you get it right without looking?

One question tells you little. A timed set on The use of exemptions and reliefs in deferring and minimising corporation tax liabilities shows your real accuracy, how long you take and where you lose marks.

Practise The use of exemptions and reliefs in deferring and minimising corporation tax liabilitiesFree diagnostic mock

More The use of exemptions and reliefs in deferring and minimising corporation tax liabilities questions