ACCA Applied Skills · Taxation (UK) · The scope of corporation tax
Vega Ltd has a year ended 31 March 2026 with a trading profit of £70,000 and a chargeable gain of £30,000. It has a trading loss brought forward of £25,000 from the previous year and has a qualifying charitable donation of £4,000 paid in the year. What are taxable total profits?
Taxable total profits are £71,000. The brought forward trading loss is relieved against trading profit only, leaving £45,000. Adding the £30,000 chargeable gain gives £75,000 and the £4,000 qualifying charitable donation is then deducted.
- A£71,000Correct
- B£75,000
- C£96,000
- D£100,000
Explanation
A brought forward trading loss is set only against future trading profits of the same trade: 70,000 − 25,000 = £45,000 trading profit. Add the gain of £30,000 for total profits of £75,000, then deduct the donation of £4,000 to give £71,000. The £75,000 option ignores the donation, while £96,000 wrongly deducts the loss only from trading profits and misses the gain.
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