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Sorry to bother you, but I have a question.
Lets say in a CAP, a company A ltd has:
Trading loss: (£100,000)
Chargeable gains: £30,000The company was a medium in the previous year.
So, if the company want to bring the losses to previous year to save tax at 25%, it has to set against the current year chargeable gains first at 20%.
But can I give the chargeable gains to group (a small company), therefore A ltd has no taxable profits in the current year and straight bring the loss to previous years to save the whole £100,000 @ 25%?
The rules regarding loss relief and chargable gains relief for companies are as follows.
1. Must offset against CURRENT year 1st.
2. Carry back against ANY profits or carry forward against TRADE ONLY profits.For your question
you will need set trading loss against trading profits FIRST then you can set it against gains. OR you can set against current year profits and then leave the gains to be taxed and carry back/forward the trading loss.For groups, trading loss must be 75% ownership between parent and sub and then 75% ownership between remaining companies in the group.
For gains groups, must be 75% ownership between parent and sub and then 50% ownership between remaining companies in the group.
As a general rule the loss relief for sole traders and companies are very similar in behaviour EXCEPT that sole traders can choose whether to offset against current year/previous/carry forward. Companies MUST ALWAYS offset current year first
Sorry but I don’t quite understand.
I hope you can answer my question:
A ltd owns B ltd of 100% OSC.
LL: 300/2 = 150,000
UL: 1,500/2= 750,000A ltd:
Has trading loss of (£100,000) and chargeable gains of £30,000.
Therefore A is small company and pay tax @ 20%.
[previous year, A was medium company with TTP of £600,000]B ltd:
Has taxable total profits of £20,000.The question is maximise the tax saved of trading loss.
Therefore I would like to save the previous year profit paid @ medium rate first which is 25%.
However, in order to bring loss back, I need to deduct against chargeable gains in A first right ?What if, I TRANSFER chargeable gains of A ltd to B ltd, to be paid at 20%. THEN A doesn’t have any gains in the year.
Therefore, the whole £100,000 loss can be straight away brought back to previous year to save tax @ 25%.
Hi you need to offset the loss against Total profits in the current year before any relief can be passed around.
You cannot transfer a gain/profit to another company in the group only losses can be shared. Although you can transfer the asset itself at no gain/no loss and the asset can then be disposed of by lower rate company, but I think this is slightly outside of the scope of your question.
In short to bring the loss back you need to set against Total profits (inc gains) and then the loss can be carried back to set off against TOTAL profits. Any unrelieved loss after current year total profit and then carry back total profit will be carried forward to set against profits of the same trade only
I would set against £30,000 gains current year and then carry back £70,000
But is not that for Gain group you can transfer chargeable loss as well as chargeable gain ?
I stand corrected you can transfer gains between groups. BUT as I also understand it, you must first offset against current year total profits before you can start to share the loss.
In terms of transferring the gain. I would assume that you would need to finish apportioning losses to current year before you are able to transfer the gain to the other members of the group.
Would be useful if there is a tax tutor around to confirm this….
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