Skip to content

ACCA Applied Skills · Taxation (UK) · The use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Zephyr Ltd sold a warehouse in the year to 31 March 2026 and made a chargeable gain of £60,000. In the same period it made a capital loss of £25,000 on the sale of shares. It has no capital losses brought forward. What amount of net chargeable gain is included in Zephyr Ltd's taxable total profits?

The net chargeable gain is £35,000. A company must set its current-period capital losses against its current-period chargeable gains, so the £25,000 share loss reduces the £60,000 warehouse gain. The net gain is then included in taxable total profits.

  1. A£60,000
  2. B£35,000Correct
  3. C£25,000
  4. D£85,000

Explanation

Current-period capital losses are set against current-period chargeable gains of the company first. Net gain = £60,000 - £25,000 = £35,000. Ignoring the loss (£60,000) is wrong because the loss must be offset, and adding the loss (£85,000) uses the wrong sign.

Did you get it right without looking?

One question tells you little. A timed set on The use of exemptions and reliefs in deferring and minimising corporation tax liabilities shows your real accuracy, how long you take and where you lose marks.

Practise The use of exemptions and reliefs in deferring and minimising corporation tax liabilitiesFree diagnostic mock

More The use of exemptions and reliefs in deferring and minimising corporation tax liabilities questions