Pension contribution corporation tax relief on an investment capital gain?

[syrio]

Thanks Jessica, that was helpful.

[Jessica@WhiteFieldTax]

CTM04505 - Corporation Tax: trading losses - relief against total profits: introduction

CTM04505 et seq maybe clearer.

The pension contribution will give you a trading loss (on contracting)

S37 allows this loss to offset to total profits including gains.

Gains and profits are taxed at the same Corporation Tax rate, so effectively there is an amalgamation of contracting profits plus gain less pension contribution but only in the context of the allowable sideways relief rules stated.

[syrio]

For this tax year I would like to maximise my pension contribution, ideally contributing the maximum allowance of £40k. However I only expect to have a trading profit from contracting in my ltd company of approximately £20k due to not working for the whole year.

However, I also have a large capital gain in my company of > £40k due to selling shares in the company sharedealing account.

I do not have any previous years unused pension contributions which I can use up.

Is it possible to make a company contribution to my pension of £40k, and get tax relief on the full £40k, i.e. can I get tax relief on the corporation tax due on the sharedealing capital gain in addition to my normal contracting income?

I thought that this was not possible, however I have asked my accountant who says I can get tax relief on the capital gain. He quotes Section 37 of the Corporation Tax Act (CTA) 2010.

Corporation Tax Act 2010

But I'm puzzled when I read the section because it starts off by talking about trade losses. I don't see how that relates to my pension and capital gains query.

37 Relief for trade losses against total profits

(1)This section applies if, in an accounting period, a company carrying on a trade makes a loss in the trade.

Is my accountant right? How much pension tax relief can I get?

I am querying this with my accountant.