ACCA Strategic Professional · Advanced Taxation (UK) · Taxation effects of the financial decisions made by businesses and individuals
Rowan Ltd, a UK trading company with no associated companies, has taxable total profits of £200,000 for the year to 31 March 2026, with no exempt distributions. It has a chargeable gain included within that figure. Using the rates and marginal relief formula in the ATX-UK tax tables, what is the corporation tax liability?
The correct liability is £49,250, which is not among the options, so this item is invalid.
- A£43,750Correct
- B£50,000
- C£38,000
- D£41,250
Explanation
Tax at 25% = £50,000. Marginal relief = (£250,000 - £200,000) x 3/200 x 200,000/200,000 = £50,000 x 3/200 = £750. Liability = £50,000 - £750 = £49,250. This is not an option, so the item is invalid.
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