ACCA Applied Skills · Taxation (UK)
Gains and Losses on the Disposal of Movable and Immovable Property
A chargeable gain arises when a chargeable person disposes of a chargeable asset. Take proceeds (or market value for gifts), deduct allowable costs, apply any relief, then deduct losses and the annual exempt amount of £3,000. Tax the rest at 18% or 24% for individuals. Companies include gains in taxable profits.
What this chapter covers
This chapter covers capital gains tax (CGT) and, for companies, chargeable gains. You learn who is chargeable, which assets are chargeable, and how to compute a gain: proceeds less cost, with special rules for gifts and connected persons. Then you learn the rules that change the answer: chattels, wasting assets, part disposals, losses, and shares.
The chapter also covers the reliefs you must know: principal private residence relief and business asset disposal relief. Investors' relief uses the same 14% rate and the same £1,000,000 lifetime limit. The examiner gives you the CGT rates, the annual exempt amount and the relief limits in the Tax Rates and Allowances. Your job is to apply them to the right facts.
The chapter links to the rest of the paper in several places. For individuals, you need your income tax computation first, because the 18% and 24% rates depend on how much of the basic rate band is left after taxable income. For companies, the gain goes into the corporation tax computation. Inheritance tax and the wider reliefs also lean on the same asset and valuation ideas.
CGT is a regular area in all three sections. Short objective questions test one rule at a time, such as a chattel limit or share matching order. Longer constructed-response questions ask for a full computation and a clear layout. Each rule is mechanical, so careful practice reliably earns marks. Objective questions are marked all or nothing, so small slips cost the whole question. Learning the exact conditions of each relief is what protects you.
Gains and losses on the disposal of movable and immovable property: topics in the order to study them
- 1Chargeable Persons, Assets and Computing a GainThis is the base layout for every gain: proceeds, costs, gain. Every later topic changes one line of it.
- 2Capital Gains Tax Rates and Annual Exempt AmountOnce you can compute a gain, you need to tax it: 18% or 24% depending on the basic rate band left, after the £3,000 annual exempt amount.
- 3Capital Losses and Their UseLosses are set against gains before the annual exempt amount is used, so learn them next, while the tax computation is fresh.
- 4Chattels and Wasting AssetsThese are short, rule-based adjustments to the gain. They are popular objective test topics.
- 5Part DisposalsThis adds the cost-apportionment fraction to your basic computation, and it is needed before property reliefs.
- 6Principal Private Residence ReliefExempt periods and the fraction of the gain depend on your understanding of ownership periods, so study it after the basic computation and part disposals.
- 7Shares and Securities Matching and PoolingThis is the longest computation in the chapter. It is easier once the basic gain, rates and losses are secure.
- 8Business Asset Disposal Relief and Investors' ReliefStudy these last. They change the rate on qualifying gains, so you need the standard rates and the order of gains and losses first.
How to prepare Gains and losses on the disposal of movable and immovable property
Work from the single gain computation outward. Each step adds one rule, and you test it with questions straight away.
- Memorise the pro forma for one disposal: proceeds, less incidental costs of sale, less cost and enhancement costs, equals the gain. Write it from memory until it is automatic.
- Learn the rates and the annual exempt amount from the ACCA tax tables. Practise working out how much basic rate band is left after taxable income, then splitting a gain between 18% and 24%.
- Do short drills on chattels, wasting assets and losses. These are single-rule objective questions, so check the exact conditions each time.
- Practise part disposals and principal private residence relief with timelines. Draw the ownership period, mark the exempt periods, then calculate the fraction.
- Practise share matching with a table: same day first, then the next 30 days, then the pool. Keep the pool cost and the number of shares in separate columns.
- Finish with business asset disposal relief and investors' relief. Then attempt full constructed-response questions in timed conditions, with clear headings, workings and a final tax figure.
Common mistakes in Gains and losses on the disposal of movable and immovable property
Using the wrong rate for the gain, such as taxing everything at 24%.
Fix: Work out taxable income first and find the unused basic rate band. Apply 18% to gains up to that amount and 24% above it. Use 14% only for gains qualifying for business asset disposal relief or investors' relief.
Using brought-forward losses too early, or wasting the annual exempt amount.
Fix: Deduct current-year losses in full first. Then use brought-forward losses only to cut the net gain to the annual exempt amount, so the £3,000 is not wasted.
Applying chattel rules to the wrong asset or the wrong limit.
Fix: Check for a chattel first, then compare the proceeds to £6,000. Then decide which rule applies: exempt, a capped gain, or the loss restriction.
Using the full cost on a part disposal.
Fix: Use the A ÷ (A + B) fraction. A is the proceeds of the part sold. B is the market value of the part retained at the date of sale.
Applying share matching in the wrong order, or mixing the pool figures.
Fix: Match same day shares first, then shares bought in the next 30 days, then use the pool. Keep the number of shares and cost in side-by-side columns.
Missing the conditions for business asset disposal relief or PPR.
Fix: Write down the conditions first, then check them against the facts. Without the conditions being met, the relief does not apply, so compute the gain normally.
Last-day revision: Gains and losses on the disposal of movable and immovable property
- A gain is chargeable if a chargeable person disposes of a chargeable asset. Gifts are treated as disposals at market value.
- Individuals pay CGT at 18% and 24%. The 18% rate applies to gains within the unused basic rate band. The rest is at 24%.
- The annual exempt amount is £3,000 for individuals. It is wasted if it is not used in the year.
- Set current-year losses against current-year gains in full. Brought-forward losses are used only as far as needed to reduce gains to the annual exempt amount.
- Business asset disposal relief and investors' relief give a 14% rate on qualifying gains, up to a £1,000,000 lifetime limit for each relief.
- Chattels sold for £6,000 or less are exempt. For a gain on a larger chattel, the gain is capped at 5/3 of the excess of proceeds over £6,000.
- For a chattel loss, proceeds are treated as at least £6,000.
- Wasting chattels (life of 50 years or less) are exempt.
- Part disposal: cost used = original cost × A ÷ (A + B), where A is the proceeds and B is the market value of the part kept.
- PPR relief: the final 9 months of ownership are always treated as occupied, if the property was the main residence at some time.
- Share matching order: same day, then the following 30 days, then the share pool.
- Losses on disposals to connected persons can only be set against gains on disposals to the same connected person.
Gains and losses on the disposal of movable and immovable property practice questions
- Kofi, a higher rate taxpayer, made a gain of £50,000 on shares that qualifies for investors' relief and has no other gains. He has used none…
- In 2026/27 Hana, a higher rate taxpayer, has chargeable gains of £20,000 on shares and a current-year capital loss of £5,000 on a different …
- In the tax year Rhea, a higher rate taxpayer, made two disposals. The first was a sale of her business, giving a gain of £150,000 that quali…
- Tomas, a higher rate taxpayer, sold his business and made a gain of £300,000 that qualifies for business asset disposal relief. He has no ot…
- Daniel, a UK resident individual, sold a freehold investment property in the tax year 2026/27 for £260,000. He bought it for £180,000 and pa…
- Jonas, a higher rate taxpayer, sold his sole trade business in the tax year and made a gain of £300,000 that qualifies for business asset di…
- For 2026/27, which statement about the capital gains tax annual exempt amount and rates for an individual is correct?
- Which one of the following disposals by a UK resident individual in 2026/27 is an exempt asset for capital gains tax purposes, so that no ch…
Gains and losses on the disposal of movable and immovable property in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Gains and losses on the disposal of movable and immovable property: frequently asked questions
What rates of capital gains tax do I use in TX-UK?
You use the rates in the ACCA tax tables: 18% and 24% for individuals. The 18% rate applies to gains within the unused basic rate band. A 14% rate applies to gains that qualify for business asset disposal relief or investors' relief.
How does the annual exempt amount work?
The annual exempt amount is £3,000 for individuals and it is deducted from net chargeable gains. If you do not use it in the year, it is lost. Companies do not get it.
Can I use all my capital losses against gains?
Current-year losses must be set against current-year gains first. Brought-forward losses are used only to reduce net gains down to the annual exempt amount. Losses on disposals to connected persons can only be used against gains on disposals to the same person.
What is the lifetime limit for business asset disposal relief?
The lifetime limit is £1,000,000. Investors' relief also has a £1,000,000 lifetime limit, and both reliefs give a 14% rate on qualifying gains. You must check that the qualifying conditions are met before you apply either.