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ACCA Applied Skills · Taxation (UK) · Taxable total profits

Which one of the following statements about the taxation of a UK company's chargeable gains is correct?

A company's chargeable gains are included in its taxable total profits and charged to corporation tax at the normal rates. Companies do not pay capital gains tax and have no annual exempt amount, which belongs only to individuals.

  1. AThe company has an annual exempt amount of £3,000 deducted from its gains
  2. BChargeable gains are included in taxable total profits and taxed at the corporation tax ratesCorrect
  3. CChargeable gains are taxed at the capital gains tax rate of 24%
  4. DChargeable gains are taxed separately from income and are outside the marginal relief calculation

Explanation

A company does not pay capital gains tax. Its chargeable gains are added to its other profits within taxable total profits and charged to corporation tax at the applicable rates. The annual exempt amount of £3,000 is only available to individuals, and the CGT rates of 18% and 24% do not apply to companies.

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