Chargeable gains for companies Flashcards
Overview of chargeable gains for companies
Disposal consideration
Less allowable costs
Less indexation allowance
Chargeable gain
Indexation factor is
RD-RI
_____
RI
round to 3 DPs
Share matching rules for companies
- All acquisitions made on the same day
- any acquisitions within the previous 9 days
- any shares in the s104 pool which consists of shares acquired on or after 1 April 1982
S104 pool
From 1 April 1985 the pool will be adjusted for each operative event. An operative event occurs whenever shares are acquired or disposed of. The indexed rise in the indexed cost pool in this case is NOT rounded to three decimal places.
Once the share pool has been indexed up to December 2017 no further indexation will be available.
Bonus issues
The pool is not indexed up prior to recording the bonus issue, as a bonus issue is not an operative event. It represents merely a reorganisation of share capital and not a new issue of shares.
Rights issues
The acquisition of rights issue shares in the s104 pool is an operative event so an indexed rise in the pool is calculated if the rights issue is prior to 1 January 2018.
Substantial shareholding exemption
If a trading company or member of a trading group disposes of shares in another trading company (or holding company of a trading group) out of a substantial shareholding
- any capital gain arising is exempt from corporation tax
- any capital loss is not allowable
Substantial shareholding definition
TTTS
Trading co disposing of
Trading co
owned Ten%
In past Six years
One where the investing company owns at least 10% of the ordinary share capital and is beneficially entitled to at least 10% of the
- distributable profits
- assets on winding up
and these conditions have been satisfied for a continuous period of 12 months during the 6 years preceding the disposal ( 12 months during the preceding 2 years for disposals prior to April 2017)
This exemption applies to whole or part of the substantial shareholding.
