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In the UK, gains made by companies fall under the scope of corporation tax rather than capital gains tax. In 2017–18, total capital gains tax receipts were £8.3 billion from 265,000 individuals and £0.6 billion from trusts, on total gains of £58.9 billion. [1] The current operation of the capital gains tax system is a recognised issue.
Each year a natural person has an amount of gain, fixed by law, which is exempt from tax. By contrast, for bodies corporate, the chargeable gain is treated as additional profits for the accounting period in question. The capital gains tax is charged as additional corporation tax. Bodies corporate have no allowance for gains free from tax.
The schedular system of taxation is the system of how the charge to United Kingdom corporation tax is applied. [1] [2] It also applied to United Kingdom income tax before legislation was rewritten by the Tax Law Rewrite Project.
Companies apply "indexation relief" to the base cost, increasing it in accordance with the Retail Prices Index so that (broadly speaking) the gain is calculated on a post-inflation basis (with different rules apply for gains accrued prior to March 1982). The gain is then subject to tax at the applicable marginal rate of corporation tax.
Schedule D also requires information on any capital loss carry-over you have from earlier tax years on line 14, as well as the amount of capital gains distributions you earned on your investments.
The exemption is found in Schedule 7AC of the Taxation of Chargeable Gains Act 1992. The rationale for the exemption is that groups of companies should be able to restructure without having to concern themselves with taxation of capital gains. Other European jurisdictions apply a more comprehensive system.
Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares. A capital gain is only possible when the selling price of the asset is greater than the original purchase ...
The capital gains tax rate on the sale of a primary residence can be as high as 20 percent of the profit on a home owned for more than a year, and as high as 37 percent on one owned for a year or ...