How is a Degrouping charge calculated?
A degrouping charge is calculated by treating MT Ltd as having sold the asset for its market value as at the time of the no gain, no loss transfer. This gain is then added to (or if a loss, deducted from) the consideration received by QR Ltd in respect of the company that has left the group (MT Ltd).
Who is liable for the Degrouping charge?
To comply with the policy behind these rules, if there is a degrouping charge, this is also deferred and only comes into charge when the new holding is disposed of (TCGA 1992, s 179(3E)).
Where does a degrouping charge arise?
Where a degrouping charge arises as a result of the disposal of shares by a company (for example, the sale of a subsidiary), any resulting degrouping charge will be treated as additional consideration for the share sale. This means that the degrouping element of the gain stays with the vendor.
How does substantial shareholding exemption work?
The substantial shareholding exemption (SSE) applies to companies and exempts certain gains that would otherwise be subject to UK corporation tax following a disposal of shares. Where the SSE applies, it is automatic and does not depend on the company making an election. …
What is stamp duty group relief?
Relief from stamp duty is available where beneficial ownership of stock or marketable securities is transferred between two bodies corporate that are members of the same stamp duty group provided that anti-avoidance provisions do not apply to bar relief.
Can a Degrouping charge be rolled over?
Applying roll-over relief to an actual degrouping charge is a separate matter. FA 2002 introduced TCAG92/S179B which allowed a gain accruing as a result of a degrouping charge to be rolled over under the provisions of TCGA92/S152 and TCGA92/S153.
Is substantial shareholding exemption automatic?
The substantial shareholding exemption (SSE) applies to companies and exempts certain gains that would otherwise be subject to UK corporation tax following a disposal of shares. Where the SSE applies, it is automatic and does not depend on the company making an election.
What is a substantial holding?
In summary, section 9 of the Act defines a ‘substantial holding’ in shares as being a ‘relevant interest’ of 5% or more (of the voting power of those shares) under the control of a shareholder and/or his associates. no matter how remote the relevant interest is or how it arises”.
Do I pay stamp duty if I transfer shares to my wife?
There’s no stamp duty on transactions between spouses and no tax to pay. When your spouse receives them, it is assumed to be at the equivalent price that you paid for them – there is no revaluation.
Can individuals claim SSE?
Does SSE have to be claimed? There is no claim mechanism for SSE. If the conditions are satisfied, the exemption is automatic. There is no ability to disclaim the exemption.
When does a company have a degrouping charge?
However, if a company leaves the group within six years of an intra-group transfer, whilst still owning the transferred asset, a ‘degrouping’ or ‘exit’ charge will arise.
When does a degrouping charge arise in a tax neutral transfer?
When a company leaves the group within six years of a tax-neutral transfer a degrouping charge may arise, calculated by reference to the IFA’s market value at the date of transfer. While the degrouping charge initially arises to the transferee, is it possible to elect for the charge to arise to another group company.
Can a degrouping charge be claimed as rollover relief?
While the degrouping charge initially arises to the transferee, is it possible to elect for the charge to arise to another group company. Rollover relief can also be claimed in instances where one company disposes of an IFA and the replacement asset is acquired by a group company and may also be claimed in respect of degrouping charges.
How does a degrouping charge affect capital gains?
Where a degrouping charge is reduced by an amount as a result of a claim under this rule then the deemed disposal and reacquisition of the asset by company A is altered from market value to market value less the amount of reduction. This ensures that company A has the correct capital gains base cost for any future disposal.