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

Which of the following entities is within the charge to corporation tax on its profits?

A UK resident limited company carrying on a trade is within the charge to corporation tax. Companies are taxed on their profits under corporation tax, whereas partnerships, sole traders and trustees of trusts are chargeable to income tax rather than corporation tax.

  1. AA partnership of three individuals trading in London
  2. BA UK resident limited company carrying on a tradeCorrect
  3. CA sole trader who runs a business through a UK shop
  4. DA trustee holding investments for a family trust

Explanation

Corporation tax is charged on the profits of companies, including UK resident limited companies on their worldwide profits. Partnerships and sole traders are taxed to income tax on their individual partners or owner. Trustees of a trust are within income tax, not corporation tax.

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