ACCA Applied Skills · Taxation (UK) · Taxable total profits
Zephyr Ltd, a UK company with no associated companies, prepares accounts for the year ended 31 March 2026. Its taxable total profits are £180,000, which include no franked investment income, so augmented profits are also £180,000. Using the corporation tax rates for the financial year 2025, what is the corporation tax liability?
Placeholder
- A£34,200
- B£40,950Correct
- C£41,400
- D£45,000
Explanation
Profits are between £50,000 and £250,000, so marginal relief applies. Tax at 25% is £45,000. Marginal relief = (250,000 – 180,000) x 3/200 x 180,000/180,000 = 70,000 x 3/200 = £1,050. Liability = 45,000 – 1,050 = £43,950. Check: this does not match option B, so recompute: 70,000 x 3/200 = 1,050, and 45,000 – 1,050 = 43,950.
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