Taxation (UK) · Chargeable gains for companies

Gains Within a Group of Companies for ACCA TX-UK

Updated 11 October 2026 · Fact-checked

Companies in a capital gains group (75% subsidiaries, held directly or indirectly) transfer chargeable assets to each other at no gain/no loss. The gain is taxed only when the asset leaves the group. Groups can also elect to transfer a gain or loss to another member, and claim group rollover relief.

Understand Gains Within a Group of Companies

A company pays corporation tax on its chargeable gains as part of its profits. A group of companies is treated differently from unconnected companies. Moving an asset around inside the group is not a real sale to an outsider, so the tax rules do not charge it.

Two companies are in a chargeable gains group if one is a 75% subsidiary of the other. For TX you apply the 75% test to ordinary share capital. A group consists of a principal company, its 75% subsidiaries, and 75% subsidiaries of those subsidiaries. For a chain, each link must satisfy the 75% test, and the principal company must also hold an effective interest of more than 50% in each company. For TX, assume the companies are UK resident.

When one group company transfers a chargeable asset to another, the transfer takes place at no gain/no loss. The transferee takes over the transferor's original cost, so the gain is deferred. It is taxed when the asset is sold outside the group. The transfer is automatic. You do not claim it.

There are three related points. First, a degrouping charge can arise if a company leaves the group within six years of receiving an asset by a no gain/no loss transfer while still holding it. The company that leaves is treated as having sold and immediately reacquired the asset at market value at the date it acquired it (the intra-group transfer date). The charge is that market value less the group's cost. It is included in the share disposal computation of the company selling the shares in the company that leaves, by adding it to the share sale proceeds. If the substantial shareholding exemption applies to the share sale, it can exempt the combined gain. Second, two group members can make a joint election to treat a gain or loss on an outside disposal as made by another member. This lets you match gains with losses or use a company's unused capital losses. All companies pay the same corporation tax rates, so any difference in rate comes only through marginal relief. Third, group rollover relief treats the group as one trader. A gain on a business asset sold by one company can be rolled into a replacement bought by another group company.

Companies have no annual exempt amount and the gains are taxed at the corporation tax rates. Capital losses can only be set against chargeable gains, not against income.

Key rules to remember

75% group test: Group = principal company + its 75% subsidiaries (direct or indirect), with an effective interest of more than 50% in each; Check the ordinary share capital held at each level of the chain before assuming a company is in the group. Each link in a chain must be a 75% subsidiary.
No gain/no loss transfer: Transfer value = original cost of the transferor (plus any enhancement expenditure); Applies automatically between group members. The transferee inherits the original cost and base date.
Degrouping charge: Gain = market value at the date the company acquired the asset (the intra-group transfer date) − group cost; added to the share sale proceeds of the company selling the shares in the company that leaves; Arises when the company leaves the group within six years of the intra-group transfer while still owning the asset. If the substantial shareholding exemption applies to the share sale, it can exempt the combined gain.
Joint election to transfer a gain or loss: Joint election between two group companies; made within two years of the end of the accounting period of the disposal; The gain or loss is treated as realised by the other company. Both companies must sign the election. It lets you match gains with losses or use unused capital losses. Rates differ only through marginal relief.
Group rollover relief: Gain immediately chargeable = lower of the gain and the proceeds not reinvested (proceeds − cost of replacement); gain rolled over = gain − the proceeds not reinvested; Replacement within one year before to three years after the disposal. Assets must be qualifying business assets in the group's trades.
Corporation tax rates for gains (FY2025): Small profits rate 19%; main rate 25%; limits £50,000 and £250,000; Gains form part of taxable total profits, so marginal relief may apply to the profits.

How to solve Gains Within a Group of Companies questions

Use this order for any group gains question.

1Draw the group structure. Mark the shareholdings and test each company for the 75% direct or indirect holding, then the more than 50% effective interest.
2Identify each disposal. Decide whether it is to another group member (no gain/no loss) or to an outsider.
3For an intra-group transfer, use the original cost and any enhancement expenditure. Do not compute a gain at that point.
4For a disposal outside the group, compute the gain using proceeds less cost less enhancement expenditure. Companies have no annual exempt amount.
5Check for a loss and a gain in different group companies. Consider a joint election so the gain and loss fall in the same company.
6Check for rollover relief. Confirm the asset is a qualifying asset, the replacement is within the time limits and any proceeds not reinvested are taxed.
7If a company has left the group, check for the six-year rule and compute the degrouping charge using market value. Add it to the share sale proceeds.
8State the corporation tax effect and the dates for any claim or election.

Quickest way: Group gains in five checks

When to use it: Use this in an objective test question or when you must decide quickly what to compute.

Is the buyer in the group? If yes, no gain/no loss and stop.
Is the seller or asset leaving the group? If yes, compute the gain normally using the original cost.
Has a company left within six years holding an asset received intra-group? If yes, compute a degrouping charge.
Is there a loss in one company and a gain in another? If yes, suggest a joint election.
Is there a business asset sold and a replacement bought by any group member? If yes, apply rollover relief.

Common mistakes in Gains Within a Group of Companies

Computing a gain on an intra-group transfer.
Students treat every disposal as a sale at market value.
Fix: Use no gain/no loss. The transferee takes the original cost and no tax arises on the transfer.
Using only direct holdings for the 75% test.
Students look only at the immediate shareholding.
Fix: Include indirect holdings in a chain and also check the more than 50% effective interest in each company.
Forgetting the degrouping charge or putting it in the wrong company.
The charge is not a normal disposal, so it is easy to miss.
Fix: Look for a company leaving the group. Include the charge in the share disposal computation of the vendor company, the company selling the shares in the company that leaves, by adding it to the share sale proceeds. It is not taxed in the leaving company. If the substantial shareholding exemption applies and its conditions are met, it can exempt the combined gain.
Applying a personal annual exempt amount to companies.
Carry-over from CGT for individuals.
Fix: Companies do not have an annual exempt amount. Gains are taxed through corporation tax.
Trying to use a capital loss against trading profits.
Confusion with trading loss relief or group relief.
Fix: Capital losses only reduce chargeable gains. Use a joint election to move the loss to the company with the gain.
Missing the time limits for rollover relief.
Students remember the three years after but forget one year before.
Fix: Write the window as one year before to three years after the disposal and check the replacement date.

Worked examples

Example 1

A Ltd owns 90% of B Ltd and B Ltd owns 80% of C Ltd. A Ltd transfers a building with a cost of £200,000 and a market value of £350,000 to C Ltd. C Ltd later sells it outside the group for £400,000. Are A, B and C in a gains group, and what is C Ltd's chargeable gain?

Show the solution

A owns 90% of B, so B is a 75% subsidiary.
B owns 80% of C, so C is a 75% subsidiary of B and therefore of the group.
A's effective interest in C is 90% × 80% = 72%, which is more than 50%, so C is in the group.
The transfer from A to C is no gain/no loss. C takes over the original cost of £200,000.
C's gain on the outside sale = £400,000 − £200,000 = £200,000.

Answer: All three companies are in the group. The transfer is at no gain/no loss and C Ltd has a chargeable gain of £200,000 on the sale.

Example 2

P Ltd owns all of S Ltd. P Ltd transferred land to S Ltd with an original cost of £60,000 and a market value of £150,000 at the date of the transfer. Four years later P Ltd sells all the shares in S Ltd for £500,000 while S Ltd still owns the land. The cost of the shares is £300,000. Assume the substantial shareholding exemption does not apply. Compute the degrouping charge and P Ltd's gain on the shares.

Show the solution

S Ltd leaves the group within six years of an intra-group transfer and still owns the asset, so a degrouping charge arises.
S Ltd is treated as having sold and immediately reacquired the land at market value at the date it acquired it (the intra-group transfer date): £150,000.
Degrouping gain = £150,000 − £60,000 = £90,000.
The charge is included in P Ltd's share disposal computation by adding it to the sale proceeds of the shares: £500,000 + £90,000 = £590,000.
P Ltd's gain = £590,000 − £300,000 = £290,000.

Answer: The degrouping gain is £90,000 and P Ltd's chargeable gain on the shares is £290,000.

Exam tips

Read the shareholding figures first and check the 75% test before doing any calculation.
Write clearly that an intra-group transfer is at no gain/no loss. This is often worth a mark.
If the question mentions a company leaving the group, look for a degrouping charge.
In the constructed response, show a short group diagram and layout headings for each company.
When a gain and loss sit in different companies, mention the joint election and the two-year time limit.

Practice questions from Chargeable gains for companies

Gains Within a Group of Companies in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalGroups: Group Relief, Gains Groups and Stamp Taxes

Gains Within a Group of Companies: frequently asked questions

What is the 75% group definition for chargeable gains?

Two companies are in a gains group if one is a 75% subsidiary of the other, directly or through a chain. The principal company must also have an effective interest of more than 50% in each company in the group.

Is a no gain/no loss transfer optional?

No. It applies automatically to a transfer of a chargeable asset between group members. You do not make a claim.

What is a degrouping charge?

It is a gain charged when a company leaves a group while still owning an asset it received on a no gain/no loss transfer within the last six years. The gain is calculated using market value at the transfer date and added to the share sale proceeds.

How do you transfer a gain or loss between group companies?

Two group companies make a joint election. The gain or loss on the disposal outside the group is treated as made by the other company. It must be made within two years of the end of the accounting period of the disposal.