Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: taxable total profits

Omega Ltd has no associated companies and prepares accounts for the six months ended 31 March 2026, having previously drawn up accounts to 30 September 2025. Taxable total profits for the six-month period are £40,000 with no other augmented profits. Which statement about the corporation tax limits is correct?

The limits are time-apportioned for the six-month period to £25,000 and £125,000. Profits of £40,000 fall between them, so marginal relief applies. They are not left unchanged and are not doubled.

  1. AThe limits are time-apportioned to £25,000 and £125,000, so profits of £40,000 are within marginal reliefCorrect
  2. BThe limits are unchanged at £50,000 and £250,000 because the period is shorter than 12 months
  3. CThe limits are doubled for a short period
  4. DThe limits apply only to periods of exactly 12 months

Explanation

For an accounting period shorter than 12 months the limits are reduced in proportion: 6/12 x £50,000 = £25,000 and 6/12 x £250,000 = £125,000. Profits of £40,000 exceed £25,000 and are below £125,000, so marginal relief applies. Leaving the limits unchanged would wrongly give the company a higher small profits band.

Did you get it right without looking?

One question tells you little. A timed set on Corporation tax: taxable total profits shows your real accuracy, how long you take and where you lose marks.

Practise Corporation tax: taxable total profitsFree diagnostic mock

More Corporation tax: taxable total profits questions