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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: chargeable gains for companies

Theta Ltd sold a building in the year to 31 March 2026 and made a chargeable gain of £200,000. It is a UK resident company with no other income apart from trading profits. Which statement about the tax treatment of this gain is correct?

The gain is added to the company's profits and charged to corporation tax at the applicable corporation tax rates. Capital gains tax rates and the £3,000 annual exempt amount apply to individuals, not companies.

  1. AThe gain is included in profits chargeable to corporation tax and taxed at corporation tax rates, with no annual exempt amount available.Correct
  2. BThe gain is taxed at the higher rate of 24% for capital gains tax.
  3. CThe gain is taxed at the 18% capital gains tax rate, after deducting the £3,000 annual exempt amount.
  4. DThe gain is exempt because the building was used in the company's trade.

Explanation

A company's chargeable gains are included in total profits and charged to corporation tax at the applicable rates, such as 19% to 25% with marginal relief. The annual exempt amount of £3,000 and the 18%/24% rates apply only to individuals and others within capital gains tax. There is no exemption merely because a building is used in the trade.

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