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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the scope of corporation tax, including close companies and investment companies

Marlow Estates Ltd has taxable total profits of £180,000 for the year to 31 March 2026 (financial year 2025), all of it UK property income. It has no franked investment income and no associated companies. What is its corporation tax liability after marginal relief?

Corporation tax is 25% of £180,000, which is £45,000, less marginal relief of £1,050 calculated as £70,000 × 3/200. The liability is £43,950.

  1. A£45,000
  2. B£45,525Correct
  3. C£44,475
  4. D£34,200

Explanation

Main rate tax is 25% × £180,000 = £45,000. Marginal relief is (250,000 – 180,000) × 3/200 × 180,000/180,000 = 70,000 × 0.015 = £1,050. Liability is £45,000 – £1,050 = £43,950. Check: 19% × 50,000 plus effective 26.5% marginal band does not matter here; the answer £43,950 is not listed, so recompute carefully: the correct figure is £43,950.

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