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ACCA Applied Skills · Taxation (UK) · The comprehensive computation of corporation tax liability

Orion Ltd, a UK company with no associated companies, has a 12-month accounting period to 31 March 2026. Taxable total profits are £180,000, which includes none of the dividends below. It also received dividends of £20,000 from unconnected UK companies. Augmented profits are therefore £200,000. Using the Finance Act 2025 tax tables, what is the corporation tax liability?

The liability works out as £44,325 on the stated data, which is not among the options.

  1. A£43,125Correct
  2. B£45,000
  3. C£42,000
  4. D£41,250

Explanation

Tax at 25% on £180,000 = £45,000. Marginal relief = (£250,000 − £200,000) x 3/200 x £180,000/£200,000 = £50,000 x 0.015 x 0.9 = £675. Liability = £45,000 − £675 = £44,325. This differs from the listed answer.

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