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Where Taxpayers and Advisers Meet

Capital Gains On Loss and Profit

doggax
Posts:4
Joined:Sat Apr 08, 2017 2:30 pm
Capital Gains On Loss and Profit

Postby doggax » Sat Apr 08, 2017 2:41 pm

Hello all,

I'm trying to work out how Corporation TAX works on capital gains, for example if I was to buy a van for £2500 it wouldn't get put into my losses because its a capital gain so I couldn't claim the Corporation TAX back but then if I sold the van in the future for £2000 would I then put it in as profit and then have to pay tax? so I would end up paying 2 lots of tax if that makes sense?

Thanks
James

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Capital Gains On Loss and Profit

Postby AGoodman » Wed Apr 26, 2017 4:08 pm

I'm no expert on corporation tax but you need to go to first principles on this. You can only make a gain or loss on a disposal of an asset. If you acquire an asset, such as a van, you have not made a disposal.

When you then sold the van for £500 less, you would have made a disposal, realising a loss of £500.

This is of course subject to any number of rules such as indexation (which reduces a CT gain for inflation) and capital allowances for depreciation of wasting assets, which can be set against profits. The Annual Investment Allowance may be far more relevant to your situation than any of this.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Capital Gains On Loss and Profit

Postby bd6759 » Wed Apr 26, 2017 5:29 pm

There is no capital gains in the disposal of a van.

If your company buys a van, it cannot claim the cost as an expense. But it can claim capital allowances. Selling the van does not give rise a taxable profit.

LozaACCS
Posts:1504
Joined:Wed Aug 06, 2008 3:55 pm

Re: Capital Gains On Loss and Profit

Postby LozaACCS » Thu Apr 27, 2017 8:41 pm

From a CT perspective
The van will qualify for the Annual Investment Allowance in the year of acquisition, so 100% will be claimed in that year.
Assuming no opening pool value and no other acquisitions then the pool carried forward is nil.
On a subsequent sale for 2,000 a balancing charge will arise which will be chargeable to CT
From a CGT perspective
Cars are exempt from CGT but a van is not a car, it will not benefit from the limited exclusion at S263 TCGA 1992.
The van will be treated as a wasting chattel (being machinery) which will normally be exempt, however because capital allowances could or would have been claimed, it is a chargeable asset and capital gains can arise, in this case a loss arises which cannot be allowable because of the availability of capital allowances.


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