Chapter 19 Chargeable Gains for companies Flashcards
What are the differences between calculating a chargeable gain for an individual and a company?
Companies get Indexation allowance (up to December 2017)
Companies pay Corporation tax on their gains
Companies don’t get an annual exemption
How is indexation allowance calculated?
(RPI at Dec 17 - RPI at acquisition)/ RPI at acquisition =
rounded to 3 d.p x cost
Indexation cannot:
- increase a loss
- create a loss
What are the share matching rules for companies?
- Same day share purchases
- Shares purchased in the 9 days before disposal
- Share pool (contains all shares bought > 9 days before disposal)
What is the difference between a share pool for companies and a share pool for individuals?
Share pools for companies have 3 columns:
No. of shares Cost *Indexed Cost
*for shares in the share pool the indexation does not need to be rounded
Share pools for individuals just have 2 columns
No, of shares Cost
What can a company do with capital losses?
Capital losses can only be offset against capital gains.
Any losses in the current period must be offset against any gains in the current period. If there aren’t enough gains to offset them, the losses will be carried forward to offset against future gains
When does the Substantial Shareholding Exemption apply (SSE)?
When one company (A) sells shares in another company (B), and
A has a substantial shareholding in B:
- >10% for 12 months in the last 6 years
B is a TRADING company
Result - the gain is EXEMPT
DE grouping charge pro-forma on disposal of group company:
Proceeds
+ De grouping charge
(Cost)
(Indexed cost)
When would a de grouping charge arise:
The asset was sold to the group company within 6 years of the breakup of group
The asset is still owned by the other company
What is the likely outcome of the degrouping charge and gain
Exempt due to SSE
SSE rules
shares owned for at least 1/6 years
At least 10% holding
The company is a trading company ( not the holding company)
*Automatic
