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

Which statement about marginal relief for a company in FY2025 is correct, based on the formula (Upper limit − Augmented profits) × Standard fraction × Taxable total profits / Augmented profits?

The standard fraction is 3/200, and marginal relief falls to nil once augmented profits reach the £250,000 upper limit because the first bracket in the formula becomes zero. Augmented profits are used in the formula, not just taxable total profits.

  1. AThe standard fraction is 3/200 and the relief is nil when augmented profits equal £250,000Correct
  2. BThe standard fraction is 1/100 and the relief is nil when augmented profits equal £250,000
  3. CThe standard fraction is 3/200 and the relief is nil when augmented profits equal £50,000
  4. DThe standard fraction is 3/200 and the relief is calculated on taxable total profits only, ignoring augmented profits

Explanation

The standard fraction is 3/200 and the upper limit is £250,000, so when augmented profits equal £250,000 the bracket (Upper limit − Augmented profits) is zero and relief is nil. At £50,000 relief is at its maximum for the band, not nil. Augmented profits feature in the formula.

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