company surcharge on undistributed investment income of a close company

[notsosure]

Hello

I wondered if someone could clarify the following for me

1. is the 20% surcharge on undistributed investment income added to the normal 12.5% or does it replace it i.e is the total 32.5% or 20%?

2. A close company sells some shares(not its own but for a company publicly traded on the stock exchange) and makes a profit does the company have to pay the 33% capital gains tax aswell as the 20% surcharge (if the proceeds remain undistributed)

thanks in advance

 

[mandelbrot]

It's an additional 20%, although the calculation can be horribly complicated.

Capital gains on the sale of an investment are not investment income (dividends, interest, rents would be the most common sources of investment income) but are subject to the CGT rate of tax 33% - the company in effect pays CGT, but does so in the form of Corporation tax.

 

[notsosure]

Ok thanks for that, so if captital gains on share sales are not counted as investment income am I correct in assuming that there is no need to distribute them, you can leave the proceeds in the company without incurring any surcharges