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ACCA Applied Skills · Taxation (UK) · The scope of corporation tax

Orion Ltd has a 12-month period ended 31 March 2026 with the following: trading profit £90,000, property business profit £20,000, chargeable gain £10,000 and dividends received from unconnected UK companies £15,000. There are no charitable donations. What are Orion Ltd's taxable total profits?

Taxable total profits are £120,000. Trading profit, property income and the chargeable gain are all taxable, but dividends received from unconnected UK companies are exempt from corporation tax, so they are excluded even though they count towards augmented profits.

  1. A£135,000
  2. B£120,000Correct
  3. C£110,000
  4. D£125,000

Explanation

Taxable total profits = 90,000 + 20,000 + 10,000 = £120,000. Dividends from UK companies are exempt and excluded from taxable total profits, although they are included in augmented profits. Adding them gives £135,000, which is wrong.

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