Company capital gains tax increase

As part of the Budget measures, the Chancellor announced that the indexation allowance for companies that make capital gains is to be scrapped. The indexation allowance currently allows companies or organisations to include the effects of inflation and claim tax relief when calculating any chargeable gains that they make.

The monthly indexation allowance will continue to be published until December 2017 and will then be frozen from 1 January 2018. This means that the indexation relief available for any gain after 1 January 2018 will be calculated based on the indexation allowance between the date the asset was acquired and the end of December 2017 regardless of the asset disposal date. Any assets purchased after 1 January 2018 will have no indexation allowance associated with them.

The Chancellor announced that this will bring the corporate system into line with personal capital gains tax and non-incorporated businesses for whom indexation allowance was abolished in 2008. However, there is no annual exemption for chargeable gains for companies as is the case for individuals.

Planning note

This measure will see companies pay increasing amounts of corporation tax on capital gains as the benefit of the relief reduces over time. According to figures published by HM Treasury this change should result in additional exchequer revenue of more than £500m by 2022-23, the end of the current Parliament.

Posted in Corporation Tax

Exeter Accountant MJ Smith & Co

Celebrating 25 years of excellence.

Free 1st Meeting
Fixed Fees
Free Support!

Find out more

Client Portal Login

Forgot Password?

Latest News

Tax Diary May/June 2018

1 May 2018 – Due date for corporation tax due for the year ended 30 July 2017.19 May 2018 – …
Read More

Let property disclosure campaign

Landlords that receive letting income should notify HMRC by 5 October after the end of the tax year for which …
Read More

Non-resident landlord’s scheme

The Non-resident landlord (NRL) scheme is a special scheme for the UK rental income of non-resident landlords. This includes companies …
Read More

Twitter Feed