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

Zeta Ltd has no associated companies and prepares accounts for the 12 months to 31 March 2026. Its taxable total profits are £150,000, with no dividend income from non-group companies, so its augmented profits are also £150,000. Using the marginal relief formula in the Tax Tables (standard fraction 3/200), what is the corporation tax liability?

The liability is £36,000, being £37,500 at 25% less marginal relief of £1,500. However, none of the listed figures equals this amount, so the item is invalid and must not be used.

  1. A£31,500
  2. B£34,500Correct
  3. C£28,500
  4. D£37,500

Explanation

Main rate: £150,000 x 25% = £37,500. Marginal relief: (£250,000 − £150,000) x 3/200 x (£150,000/£150,000) = £1,500. Liability: £37,500 − £1,500 = £36,000. Check: this is 25% less relief, so £36,000 does not match any option and the data must be reviewed. Recompute: 100,000 x 3/200 = 1,500, giving £36,000.

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