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ACCA Strategic Professional · Advanced Taxation (UK) · Alternative ways of achieving personal or business outcomes and their tax consequences

Kestrel Ltd has an 12-month accounting period in the financial year 2025 with taxable total profits of £1,800,000 and no associated companies. For the current period, which statement on quarterly instalment payments is correct under the ATX-UK tax table threshold?

Quarterly instalments are required. The profit threshold in the tables is £1,500,000 and Kestrel has no associated companies to divide it. Taxable total profits of £1,800,000 exceed the threshold, so the company pays corporation tax by instalments rather than in one payment.

  1. AIt is not large for instalment purposes because profits are below £1,500,000 only if it is a new company
  2. BIts profits exceed the £1,500,000 threshold, so quarterly instalments are requiredCorrect
  3. CIt must pay in one amount nine months and one day after the period end because the threshold is £5,000,000
  4. DIt pays by instalments only if profits exceed the £250,000 upper limit and it is a close company

Explanation

The quarterly instalment profit threshold in the tables is £1,500,000. Kestrel has no associated companies, so the threshold is not divided, and profits of £1,800,000 exceed it. Instalments are therefore required, subject to any very large company rules and first-year exceptions not relevant here.

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