ACCA Applied Skills · Taxation (UK)

The scope of the taxation of capital gains: formula sheet

Full chapter guide

Key formulas

Chargeable persons: CGT: individuals + personal representatives + trustees. Companies: corporation tax on chargeable gains; Partners are taxed individually on their share of a partnership gain.
Scope for UK residents: UK resident = worldwide gains chargeable; Not resident: generally no CGT, subject to exceptions such as UK land.
Statutory residence test: days: Under 16 days: automatically not resident. 183 days or more: automatically resident; Between these limits you must count UK ties.
Previously resident, ties needed: 16–45 days: 4 ties. 46–90: 3 ties. 91–120: 2 ties. 121–182: 1 tie; Resident if you have that number of ties or more.
Not previously resident, ties needed: 16–45 days: automatically not resident. 46–90: 4 ties. 91–120: 3 ties. 121–182: 2 ties; Resident if you have that number of ties or more.
CGT rates and annual exempt amount: Lower rate 18%. Higher rate 24%. Annual exempt amount £3,000; Trustees and PRs pay 24%. Trustees normally get half the annual exempt amount.
PRs' annual exempt amount: Full amount in the tax year of death and the next two tax years; The deceased gets the full amount up to the date of death.
Chargeable gain outline: Proceeds (or market value) − incidental costs of sale − cost − enhancement expenditure = gain or loss; Only applies once you have a chargeable disposal of a chargeable asset.
Part disposal cost: Cost deducted = Original cost × A ÷ (A + B); A = proceeds of the part sold (market value if gifted). B = market value of the part kept at the date of disposal.
Date of disposal: sale: Date of disposal = date of contract; If the contract is conditional, use the date the condition is satisfied. Completion date is not used.
Date of disposal: gift: Date of disposal = date the gift is made; Market value is used as the proceeds.
Disposal includes: Sale, gift, exchange, loss, destruction; Check the asset is chargeable and not exempt.
CGT rates and annual exempt amount (given in the exam): Lower rate 18%, higher rate 24%, annual exempt amount £3,000; These are provided in the tax rates and allowances. You do not need them to identify a disposal.
Annual exempt amount: Taxable gains = Chargeable gains − losses − £3,000; Applies only to gains left after exempt assets and disposals are removed. Individuals only.
CGT rates for individuals: 18% (lower rate) or 24% (higher rate); The rate depends on how much of the basic rate band is left after taxable income. Business asset disposal relief gains are taxed at 14%.
Chattel sold for £6,000 or less: Proceeds ≤ £6,000 → exempt; The test uses proceeds only. Cost is irrelevant to the exemption. Gains are exempt. Losses are allowable only where cost exceeds £6,000, with proceeds deemed to be £6,000. Where cost is also £6,000 or less, no loss is allowable.
Chattel sold for more than £6,000 (gain): Gain = lower of (proceeds − cost) and 5/3 × (proceeds − £6,000); Use when proceeds exceed £6,000 and there is a gain. The 5/3 rule only bites where the normal gain is larger than 5/3 × the excess of proceeds over £6,000.
Chattel sold at a loss: Deemed proceeds = £6,000 if actual proceeds are below £6,000 and cost is above £6,000; Allowable loss = cost − £6,000. If cost is £6,000 or less, no loss is allowable.
Exempt disposals: Gift to charity = exempt; death = exempt; spouse transfer = no gain, no loss; Spouse transfers are not exempt. The recipient takes over the original cost.
Basic gain: Chargeable gain = Disposal proceeds − (Cost + incidental costs of acquisition and disposal); A negative result is a capital loss. Calculate each disposal separately.
Net gains for the year: Net chargeable gains = Gains − current-year losses (in full); Current-year losses cannot be restricted to protect the annual exempt amount.
Brought-forward losses: Use b/f losses only to reduce net gains to £3,000; Unused losses carry forward. Do not waste the annual exempt amount.
Taxable gains: Taxable gains = Net gains after losses − annual exempt amount (£3,000); The annual exempt amount cannot be carried forward or back.
CGT rates for individuals: 18% within unused basic rate band; 24% above it; The basic rate band is £37,700. Reduce it by taxable income, which is taken first.
BADR and investors' relief rate: 14% on qualifying gains up to £1,000,000 lifetime limit each; Gains above the limit are taxed at the normal 18% or 24%.
Normal CGT due date: 31 January following the end of the tax year of disposal; Applies to shares, non-residential property and most other assets. Disposal in 2025-26 gives 31 January 2027.
UK residential property deadline: Report and pay within 60 days of completion; Applies where CGT is payable. Count from completion, not exchange of contracts.
CGT rates: Lower rate 18%; higher rate 24%; Lower rate applies to gains within the unused basic rate band after taxable income.
Annual exempt amount: £3,000; Deduct from net gains before applying the rates.
BADR and investors' relief: 14% on qualifying gains, lifetime limit £1,000,000 each; These rates and limits appear in the exam tax tables.
Finance Act examined: Finance Act 2025 for June 2026 to March 2027 and June 2027; Royal Assent 20 March 2025.
Supplementary instructions: Round to nearest £; apportion to nearest month; show all workings in Section C; These are printed in the exam.

Quick revision

Ask three questions first: chargeable person, chargeable disposal, chargeable asset.
Individuals pay CGT on gains. Companies pay corporation tax on their gains.
Residence for CGT follows the statutory residence test: under 16 days is automatically not resident, and 183 or more is automatically resident.
Between those limits, the number of UK ties and previous residence decide the result.
The annual exempt amount is £3,000 for individuals.
CGT rates are 18% (lower rate) and 24% (higher rate).
Business asset disposal relief and investors' relief both have a £1,000,000 lifetime limit and a 14% rate.
Exempt assets and exempt disposals produce no chargeable gain and no allowable loss.
Check the scenario for exempt items before you start any computation.
Use the tax tables in the exam for rates and limits, and spend your revision time on how to apply them.
TX-UK in this period examines Finance Act 2025.

Common mistakes

Charging CGT on a company's gain Fix: Companies pay corporation tax on chargeable gains. CGT is only for individuals, PRs and trustees.
Treating death as a disposal Fix: No CGT arises on death. The PRs acquire the assets at market value at the date of death.
Using the completion date as the date of disposal for a sale. Fix: Use the date of the contract unless it is conditional. Then use the date the condition is satisfied.
Saying a gift is not a disposal because there are no proceeds. Fix: A gift is a disposal. Use market value as the proceeds.
Claiming a loss on a private car or on gilts. Fix: Exempt assets have no allowable losses. Ignore both gains and losses on them.
Treating a gift to a spouse as an exempt disposal. Fix: Say no gain, no loss. The spouse takes over your cost and date of acquisition, so the gain is deferred, not removed.
Deducting all brought-forward losses even when gains are below the annual exempt amount. Fix: Use b/f losses only to bring net gains down to £3,000. Carry forward the rest.
Carrying forward unused annual exempt amount. Fix: The annual exempt amount is lost if not used in the year.
Using 31 January for a residential property sale when tax is payable. Fix: Always check the asset type first. UK residential property with tax payable means the 60-day deadline.
Counting the 60 days from exchange of contracts. Fix: For the 60-day deadline, count from completion.

Exam tips

In objective tests, read the person first. Many wrong answers come from using CGT for a company.
Memorise the residence table by column. Practise reading it with both previously resident and not previously resident cases.
In constructed-response questions, state residence in one line before computing. Markers reward a clear conclusion.
For an estate, show the market value at death as the base cost and say that death is not a disposal.
Always state the rate you use and why: 18% or 24% for individuals, 24% for PRs and trustees.
Write the date of disposal explicitly in Section C answers. Markers give a mark for the correct contract date.
In objective questions, watch for the trap of a completion date in a different tax year from the contract date.
For part disposals, write down A and B before calculating. Do not use the cost of the remaining part as B.