Taxation of Chargeable Gains Act 1992 (c. 12)

[F1 Part 1 U.K. Capital gains tax and corporation tax on chargeable gains

Textual Amendments

F1 Pt. 1 substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 2

Chapter 2 U.K. Corporation tax on chargeable gains

Corporation tax on chargeable gains: the general scheme U.K.

2 Corporation tax on chargeable gains U.K.

(1) As a result of section 2(1) and (2) of CTA 2009, corporation tax is charged on chargeable gains accruing to a company on the disposal of assets.

(2) The charge to corporation tax on chargeable gains has effect in accordance with this Act and all other relevant provisions of the Corporation Tax Acts.

2A Company's total profits to include chargeable gains U.K.

(1) The amount of chargeable gains to be included in a company's total profits for an accounting period is the total amount of chargeable gains accruing to the company in the period after deducting—

(a) any allowable losses accruing to the company in the period, and

(b) so far as not previously deducted under this subsection, any allowable losses previously accruing to the company while it was within the charge to corporation tax.

(2) For the purposes of corporation tax on gains “allowable loss” does not include a loss accruing to a company if, had a gain accrued, the company would not have been chargeable to corporation tax on the gain.

[F2 (3) Subsection (4) applies if—

(a) a company has two or more accounting periods that fall wholly within the same financial year,

(b) the company is chargeable to corporation tax for each of those accounting periods only because of a chargeable gain accruing to the company on the disposal of asset, and

(c) in the period (if any) between each of those accounting periods, the company is not within the charge to corporation tax.]

Textual Amendments

F2 S. 2A(3)(4) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020) by Finance Act 2020 (c. 14), Sch. 4 paras. 39, 42 (with Sch. 4 paras. 43-46)

Modifications etc. (not altering text)

C1 S. 2A applied (with modifications) (with effect in accordance with Sch. 4 para. 43(1) of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 para. 44(2)(3)

C2 S. 2A(1)(a) modified (with application in accordance with Sch. 4 para. 45(1)(2) of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 para. 45(3)

C3 S. 2A(1)(b) modified (retrospective to 29.10.2018) by Finance Act 2020 (c. 14), Sch. 4 para. 46

Territorial scope U.K.

2B Territorial scope of charge to corporation tax on chargeable gains U.K.

(1) A company which is resident in the United Kingdom in an accounting period is chargeable to corporation tax on chargeable gains accruing to the company in the period on the disposal of assets wherever situated.

(2) This is subject to Chapter 3A of Part 2 of CTA 2009 (exemption from charge in respect of profits of foreign permanent establishments).

(3) A company which is not resident in the United Kingdom is chargeable to corporation tax on chargeable gains that—

(a) accrue to the company on the disposal of assets situated in the United Kingdom that have a relevant connection to the company's UK permanent establishment (see section 2C),

(b) accrue at a time when it has that permanent establishment, and

(c) are, in accordance with sections 20 to 32 of CTA 2009, attributable to that permanent establishment.

(4) In addition, a company which is not resident in the United Kingdom is chargeable to corporation tax on chargeable gains accruing to the company on the disposal of assets not within subsection (3) that are—

(a) interests in UK land, or

(b) assets (wherever situated) not within paragraph (a) that derive at least 75% of their value from UK land where the company has a substantial indirect interest in that land.

(5) Section 1C applies for the purposes of subsection (4)(a) as it applies for the purposes of section 1A(3)(b) (disposing of interests in UK land).

(6) The reference in subsection (4)(b) to assets deriving at least 75% of their value from UK land where the company has a substantial indirect interest in that land is to be read in accordance with Schedule 1A.

2C Non-UK resident company with UK permanent establishment U.K.

(1) For the purposes of section 2B(3) a company has a UK permanent establishment at any time if, at that time, the company carries on a trade in the United Kingdom through a permanent establishment there.

(2) For the purposes of section 2B(3) an asset has a relevant connection to a company's UK permanent establishment if—

(a) it is, or was, used in or for the purposes of the trade at or before the time of the disposal,

(b) it is, or was, used or held for the purposes of the permanent establishment at or before that time, or

(c) it is acquired for use by or for the purposes of the permanent establishment.

(3) Section 2B(3) does not apply to a company which, as a result of Part 2 of TIOPA 2010 (double taxation arrangements), is exempt from corporation tax for the accounting period in respect of the profits of the permanent establishment.

(4) In the case of the long-term business of an overseas life insurance company, subsection (2) has effect as if for paragraph (b) there were substituted—

“(b) it is, or was, used or held for the purposes of the permanent establishment at or before that time (irrespective of where it is situated at that time),”.

(5) In this section references to a trade include an office and references to carrying on a trade include holding an office.

Application of CGT principles etc U.K.

2D Application of CGT principles in calculating gains and losses U.K.

(1) The total amount of chargeable gains to be included in a company's total profits for an accounting period is calculated for corporation tax purposes in accordance with capital gains tax principles.

(2) All of the following questions are determined in accordance with the enactments relating to capital gains tax as if accounting periods were tax years—

(a) any question as to the amounts to be, or not to be, taken into account as chargeable gains or allowable losses,

(b) any question as to the amounts to be, or not to be, taken into account in calculating gains or losses,

(c) any question as to the amounts charged to tax as a company's gains, and

(d) any question as to the time when any amount is treated as accruing.

(3) This section is subject to any provision made elsewhere by the Corporation Tax Acts.

2E References to income tax or Income Tax Acts in case of companies U.K.

(1) If the CGT enactments contain any reference to—

(a) income tax, or

(b) the Income Tax Acts,

the reference is, in relation to a company, to be read as a reference to corporation tax or the Corporation Tax Acts.

(2) But—

(a) this does not affect references to income tax in section 39(2), and

(b) so far as the CGT enactments operate by reference to matters of any specified description, account is to be taken for corporation tax purposes of matters of that description confined to companies but not of any confined to individuals.

(3) In this section “the CGT enactments” means the enactments relating to capital gains tax.

2F Interaction of capital gains tax and corporation tax U.K.

(1) This Act as it has effect in accordance with this Chapter is not to be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes.

(2) But this Act is, so far as it is consistent with the Corporation Tax Acts, to apply in relation to capital gains tax and corporation tax on gains as if they were one tax.

(3) Accordingly, a matter which in a case involving two individuals is relevant to both of them in relation to capital gains tax is in a similar case involving an individual and a company—

(a) relevant to the individual in relation to capital gains tax, and

(b) relevant to the company in relation to corporation tax.

Supplementary U.K.

2G Assets of a company vested in a liquidator U.K.

(1) If assets of a company are vested in a liquidator—

(a) this Chapter, and

(b) the enactments applied by this Chapter,

apply as if the assets were vested in the company and as if the acts of the liquidator in relation to the assets were the company's acts.

(2) Accordingly, acquisitions from or disposals to the liquidator by the company are ignored.

(3) The assets may be vested in the liquidator under section 145 of the Insolvency Act 1986 or Article 123 of the Insolvency (Northern Ireland) Order 1989 or otherwise.]