Skip to content

ACCA Applied Skills · Taxation (UK) · The effect of a group corporate structure for corporation tax purposes

Mu Ltd and Nu Ltd are in a capital gains group. Nu Ltd has a chargeable gain of £90,000 in the year, and Mu Ltd has a capital loss of £40,000 in the same year. A joint election is made to transfer the loss to Nu Ltd. What is the net chargeable gain included in Nu Ltd's taxable total profits?

The net chargeable gain is £50,000. After the joint election, Mu Ltd's £40,000 loss is treated as Nu Ltd's and is deducted from its £90,000 gain, and the net gain is included in Nu Ltd's taxable total profits.

  1. A£90,000
  2. B£130,000
  3. C£40,000
  4. D£50,000Correct

Explanation

The loss of £40,000 transferred to Nu Ltd is set against its gain of £90,000, giving £50,000 net. £130,000 adds the loss by mistake.

Did you get it right without looking?

One question tells you little. A timed set on The effect of a group corporate structure for corporation tax purposes shows your real accuracy, how long you take and where you lose marks.

Practise The effect of a group corporate structure for corporation tax purposesFree diagnostic mock

More The effect of a group corporate structure for corporation tax purposes questions