Calculate the chargeable gain arising on the disposal of the asset Indexation factors are as follows:
June 1987 to December 2017
1.706
August 1991 to December 2017
1.067
2. Gains and losses (a)
Capital gains are chargeable to corporation tax.
(b)
Capital losses only arise when net proceeds are less than allowable cost. REMEMBER:
Indexation allowance may not be used to either create or increase a loss.
(c)
If capital gains and losses arise in the same accounting period, they are netted o
ff
.
If the resultant figure is a gain, it is charged to corporation tax.
If the resultant figure is a loss, it is carried forward and set against future capital gains.
(d)
Capital losses may only be relieved against capital gains, not income.
3. Share matching rules for companies Disposal of shares give rise to a chargeable gain or allowable loss. It is di
ffi
cult however to identify
which shares are being sold, and therefore establish the cost of those shares sold where it is only
some of the shareholding being sold and the shares had been acquired over a period of time at
di
ff
erent costs.
We need to identify the shares sold by using matching rules as laid down by HMRC which, as you
may expect, are not exactly the same as the matching rules that we used when dealing with the
same problem for individuals disposing of shares as we saw back in Chapter 13. Thus the shares
sold are deemed to be disposed of in the following order:
๏
shares acquired on same day
๏
shares acquired in previous 9 days
๏
shares contained within the share pool which is made up of any shares acquired more than 9
days previous.
The share pool records the number and cost of shares for each acquisition and disposal as it did for
individuals, but also has to deal with the fact that companies are entitled to indexation allowance.
147
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