What does section 676BE of the Corporation Tax Act 2010 explain?

Section 676BE explains how to determine what portion of a company's profits represents a relevant gain. It compares the relevant gain (Y) against the total chargeable gains or non-trading chargeable realisation gains (Z) for the accounting period and takes the lower of the two figures as the amount of profits attributable to the relevant gain.

How is the amount of profits representing a relevant gain calculated under section 676BE?

You compare two amounts: Y (the relevant gain) and Z (total chargeable gains for the accounting period). If Y does not exceed Z, the profits representing the relevant gain equal Y. If Y exceeds Z, the amount is capped at Z. In practice, you take the lower of the two figures.

What happens if the relevant gain exceeds total chargeable gains for the period?

If the relevant gain (Y) exceeds the total chargeable gains (Z) for the accounting period, the amount of profits representing the relevant gain is capped at Z. This ensures profits attributable to the relevant gain cannot be higher than the overall chargeable gains actually recognised for the period.

Can you give an example of the section 676BE calculation?

If a company has a relevant gain of £80,000 and total chargeable gains of £100,000, the profits representing the relevant gain are £80,000 since the gain does not exceed the total. If the relevant gain were £120,000, the amount would be capped at £100,000, being the lower total chargeable gains figure.

Corporation Tax Act 2010 section 676BE

Meaning of "amount of profits which represents a relevant gain"

Section 676BE explains how to determine what portion of a company's profits represents a relevant gain, by comparing the gain itself against the total chargeable gains figure for the accounting period.

The calculation compares two amounts: the relevant gain (Y) and the total chargeable gains or non-trading chargeable realisation gains included for the accounting period (Z)
If the relevant gain (Y) is equal to or less than the chargeable gains total (Z), the amount of profits representing the relevant gain is simply Y
If the relevant gain (Y) exceeds the chargeable gains total (Z), the amount of profits representing the relevant gain is capped at Z
In effect, the amount of profits attributable to a relevant gain can never be more than the total chargeable gains figure for the period

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