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

Wexford Ltd, a UK resident company with a 31 December year end, pays its corporation tax liability for the year to 31 December 2025 late. For ATX-UK purposes, which rate of interest applies to the underpaid tax for the period between the due date and the date of payment?

Interest on late-paid corporation tax is charged at the assumed rate for underpaid tax, 8.50%. The 3.50% rate is for overpaid tax and 3.75% is the official rate for benefits, so neither applies to a late payment.

  1. A3.50%
  2. B8.50%Correct
  3. C3.75%
  4. D25%

Explanation

The tax rates table gives the assumed rate of interest on underpaid tax as 8.50%. The 3.50% rate applies to overpaid tax, and 3.75% is the official rate used for benefits such as beneficial loans. 25% is the main corporation tax rate, not an interest rate.

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