Capital Gains & Limited Company

bigmuggsy

Hi all

Can anyone just clarify this for me please;

Limited company, client part ex commercial vehicle and made a gain of £3755 in the P&L.

Balancing charge works out to be £1221.

My question is do I add the £3755 gain back to profit in the tax comp and only treat the BC for tax purposes, and if so is any Capital Gains tax applicable on the £3755?

Many thanks for anyone who can help.

Regards




Mike

jamesm96

bigmuggsy wrote: »

Hi all

Can anyone just clarify this for me please;

Limited company, client part ex commercial vehicle and made a gain of £3755 in the P&L.

Balancing charge works out to be £1221.

My question is do I add the £3755 gain back to profit in the tax comp and only treat the BC for tax purposes, and if so is any Capital Gains tax applicable on the £3755?

Many thanks for anyone who can help.

Regards




Mike

Hi Mike,

Absolutely right on the profit on disposal vs. balancing charge; remove the accounting profit on disposal in the taxable profit calculation, and add in the balancing charge. That gives you (assuming all other adjustments are taken care of, like depreciation...etc) your total taxable profit including the 'gain', and you calculate the corporation tax on that.

Remember, though, Companies don't pay Capital Gains Tax, just people do; Companies pay CT on all taxable income and gains.

Hope that helps,

Mike James.

bigmuggsy

Thanks very much Mike, much appreciated.