Capital Gains Tax for Companies Capital Losses
A company makes a chargeable gain if it disposes of an ‘asset’ for more than it paid for it. Disposal can include; selling the asset; exchanging it; giving it away or even receiving compensation for damage or destruction.
When assets have been sold for less than their cost – you are making a capital loss, not a chargeable gain. Any chargeable gains are included in the corporation tax return and taxed along with your business profits, using the same tax rate, accordingly any losses are also recorded.
Where assets have qualified for capital allowances (eg annual writing-down allowance), the loss you can claim is reduced by the value of these allowances and Indexation allowance can only be used to reduce a capital gain, not to increase a loss.
Where you have capital losses, these can be deducted from any company capital gains to work out the net chargeable gains that are taxable. If the losses exceed any gains, the balance can be carried forward to set against future company capital gains.
Finally, any trading losses you have made can also be set against company capital gains when calculating your corporation tax liability.
The rules and regulations around Capital Gains Tax is vast and that is why
Having the help from an accountant to complete your Capital Gains Tax supplement in the tax return can save you a lot of money with the experience and knowledge, especially with changing rules every year.
Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice.