Corporate chargeable gains

By Tolley in association with Jackie Barker of Wells Associates
  • (Updated for Budget 2020)

The following Corporation Tax guidance note by Tolley in association with Jackie Barker of Wells Associates provides comprehensive and up to date tax information covering:

  • Corporate chargeable gains
  • Scope of charge
  • Groups of companies
  • Calculation of gains
  • Allowable capital losses
  • Foreign currency
  • Interaction with capital allowances
  • Wasting assets
  • Rollover relief
  • The substantial shareholdings exemption
  • General planning points

This guidance note explains the general rules and provides an overview of the corporation tax implications of the disposal of company assets.

Scope of charge

When a company disposes of an asset by way of sale, gift or in any other manner, a chargeable gain or allowable loss may arise. The receipt of a capital sum in respect of compensation for the damage or destructionof a company asset may also give rise to a chargeable gain.

For tax purposes, a company is liable to corporation tax in respect of its chargeable gains. The total chargeable gains arising in an accounting period are included as part of the company’s taxable total profits and taxed at the rate of corporation tax in force for the relevant financial year. See the Computation of corporation tax guidance note for details of the latest rates. 

CTA 2009, s 2

All companies that are treated as resident in the UK are liable to corporation tax on their chargeable gains. 
CTA 2009, s 5; TCGA 1992, s 2A (from 6 April 2019); TCGA 1992, s 8 (up to 5 April 2019)

A non-UK resident company that carries on a trade in the UK via a permanent establishment will be liable to corporation tax on any chargeable gains that arise in respect of the disposal of UK assets. 
CTA 2009, s 19; TCGA 1992, s 2C (from 6 April 2019); TCGA 1992, s 10B (up to 5 April 2019)

See the Residence of companies and Permanent establishment guidance notes for further details on determining a company’s residence.

Groups of companies

Special rules apply in respect of the calculation of chargeable gains for companies that are part of a group. A company will be grouped with all of its 75% subsidiaries and its subsidiaries’ 75% subsidiaries, etc but only to the extent that a subsidiary is an effective 51% subsidiary of the holding company (referred to as the principal company). 

TCGA 1992 s 170 3 The general position for groups of companies

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