Chargeable gains planning

Produced by Tolley

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Chargeable gains planning
  • Individual companies
  • Sale of assets that give rise to a gain
  • Sale of assets that give rise to a loss
  • Deferral relief
  • Claims of negligible value
  • Groups of companies
  • No gain no loss transfers and deemed transfers
  • Group wide rollover
  • Outbound migrations and exit charges
  • More...

Chargeable gains planning

This guidance note is intended to show the various strategies both individual companies and groups of companies can utilise in order to minimise the charge to corporation tax on any chargeable gains that may arise during the accounting period. It is assumed that all companies in the group pay the same rate of corporation tax based on FY 2015 and later rules.

The main benefits of these strategies can be summarised as follows:

  1. to ensure that gains arise in group members that are loss making

  2. the deferral of the charge to corporation tax to later accounting periods for cash flow advantages, or to benefit from lower rates of corporation tax

  3. the maximisation of allowable losses (sometimes referred to as capital losses) where available in order to reduce the net chargeable gain arising within acompany or agroup

  4. to ensure that where possible, gains are negated

Individual companies

Sale of assets that give rise to again

In cases where acompany is due to sell an asset which will give rise to again, consideration should be given to delaying the sale so that the gain is postponed until the next accounting period. This will of course be subject to commercial considerations. This could postpone the corporation tax due on the chargeable gain for 12 months, thereby, providing cash flow benefits. If tax rates are scheduled to fall in the next financial year, then this will provide an additional benefit of alower tax bill.

See the Calculation of corporate capital gains guidance note for more details.

The ability to do this would be dependent upon the tax profile of the company in question. It would be counterproductive to push again into the next accounting period if there are trading losses in the current accounting period which would otherwise shelter the gain. This would be especially true if the company is due to make profits in the next accounting period. The company must also consider the

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