One of the popular areas in the Advanced Tax exam is CGT (capital gains tax) groups.

For CGT groups, the direct shareholding has to be 75% but the indirect shareholding only has to be 51%.

Only UK resident companies can be included in the group, but the holding company can be an overseas company.

It is important to remember that a company can only be in a single CGT group.

There are 3 tax benefits of being in a CGT group.

  •  Assets like buildings can be transferred to group members at nil gain/nil loss.
  • Use the group election to give a capital gain / capital loss to a group company. This must be done within 2 years from the end of the accounting period in which the disposal took place.
  • Group rollover relief enables the gain on business assets to be postponed if one group company sells an asset (usually a building ) and reinvests the sale proceeds in a replacement business asset ( buildings or fixed plant and machinery ).

If you are planning on doing Taxation or Advanced Tax in March 2024, I recommend you purchase Tax Condensed or Advanced Tax Condensed which will allow you to learn the technical rules. If you then practice the key questions I recommend, you too will be ready for anything the examiner throws at you.

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