ACCA TX ^UK Syllabus E. Corporation Tax Liabilities - Capital losses - Notes ^{2 / 5}

When a company has a capital loss:

1. It is first set off against any Capital gains arising in the same accounting period.

2. Any remaining capital loss is then carried forward and set off against future Capital gains.

Illustration:

Kruti Ltd. sold an office building on 06/06/2023 for £400,000, the unindexed cost of the asset was £420,000. 

There were no other chargeable asset sales in FY23.

In FY24, Kruti Ltd. realised a capital gain of £25,000 on the sale of a small piece of land that the company owned.

What is the capital income to be assessed to corporation tax in FY23 and FY24?

Solution:

• FY 23 (1/4/23-31/3/24)

  Disposal proceeds £400,000
  Acquisition cost (£420,000)
  Capital loss (£20,000)

• The capital income to be assessed to corporation tax in FY23 is Nil.

  The loss of (£20,000) will be carried forward and set off against future capital gains.

• FY 24 (1/4/24-31/3/25)

  Net capital gain  £25,000
  Capital loss b/f (£20,000)
  Chargeable gain £5,000