My client company had just sold one of their trading premises for £500,000 and they have also entered into a section 198 election for capital allowances of £75,000. They bought the property over 10 years ago for £420,000. How will this election affect the capital gains tax (CGT) calculation for corporation tax purposes?

The section 198 Capital Allowances Act 2001 (CAA 2001) election should not affect the CGT calculations unless the property is being sold at a capital loss.

The company will pay corporation tax on the gain as calculated below:

As you can see, the £75,000 under the election does not affect this calculation.