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ACCA Applied Skills · Taxation (UK) · The comprehensive computation of corporation tax liability

Zeta Ltd has one 51% subsidiary, Eta Ltd, and no other companies are related to it. Both companies prepare accounts for the year ended 31 March 2026 (a full 12-month period). Using the corporation tax limits in the Finance Act 2025 tax tables, what are the lower and upper limits that apply to Zeta Ltd for this year?

The limits are £25,000 and £125,000. Zeta Ltd and its 51% subsidiary are associated, so there are two companies in the group. The standard lower limit of £50,000 and upper limit of £250,000 are each divided by two for a 12-month period.

  1. A£50,000 and £250,000
  2. B£25,000 and £125,000Correct
  3. C£16,667 and £83,333
  4. D£100,000 and £500,000

Explanation

Zeta Ltd and Eta Ltd are associated companies, so there are 2 companies in total. The limits are divided by 2: £50,000 / 2 = £25,000 and £250,000 / 2 = £125,000. Option A ignores the associated company. Option C divides by 3, wrongly counting an extra company.

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