Illustration - degrouping charge
In this lesson, you'll learn how degrouping charges work and when they apply — a crucial concept for Advanced Taxation (ATX) that often appears in exam questions.
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In this lesson
- 0:00 Group relief and asset transfers overview
- 1:02 Understanding no gain no loss transfers
- 2:22 Calculating the D grouping charge
- 4:18 Gain on disposal of shares calculation
- 5:02 Substantial shareholding exemption application
About this lesson
You'll work through a realistic scenario where an asset is transferred between group companies at no gain or loss, then one company leaves the group within six years, triggering a degrouping charge. The illustration shows you the step-by-step calculation: how to identify that a gains group exists, compute the gain that was avoided on the original transfer using indexation allowance, and add that degrouping charge to the proceeds when the shareholding is disposed of. You'll also see how the substantial shareholding exemption can eliminate the tax liability entirely — and crucially, why you must show all your working and reasoning in the exam rather than jumping straight to the answer.
Duration: 6m
Transcript
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