Taxation (UK) · Gains and losses on the disposal of movable and immovable property

Capital Gains Tax Rates and Annual Exempt Amount (TX-UK)

Updated 11 October 2026 · Fact-checked

Individuals pay CGT on taxable gains at 18% to the extent they fit in any unused basic rate band, and 24% above it. First deduct losses and the £3,000 annual exempt amount. Gains qualifying for business asset disposal relief are taxed at 14%. ACCA gives these rates in the exam.

Understand Capital Gains Tax Rates and Annual Exempt Amount

Capital gains tax (CGT) is charged on the profit an individual makes when they dispose of a chargeable asset. You first work out the chargeable gain on each disposal. You then add up the gains, deduct losses, and deduct the annual exempt amount. What is left is the taxable gain.

The annual exempt amount is £3,000 for an individual. It is a tax-free slice of gains each tax year. If you do not use it, you lose it. It cannot be carried forward and it cannot be used against income.

The rate you pay depends on your taxable income. Work out your taxable income first, which means income after the personal allowance and other deductions. Compare it with the basic rate band of £37,700. Any unused part of that band is taxed at the lower rate of 18%. Taxable gains above it are taxed at the higher rate of 24%. If your taxable income already uses up the band, all the gain is at 24%.

Students often ask whether residential property has a different rate. In the ACCA rates table for this exam there is one pair of rates for individuals: 18% and 24%. You do not need to switch rates for residential property. Use the same bands for all assets.

One exception is business asset disposal relief (and investors' relief). Qualifying gains are taxed at 14%, up to a lifetime limit of £1,000,000 each. Gains above the limit, and gains that do not qualify, are taxed at 18% or 24% as normal.

Key rules to remember

Taxable gain: Taxable gain = Total chargeable gains − current year losses − brought forward losses used − annual exempt amount; Brought forward losses are used only as far as needed to reduce gains to the annual exempt amount. Current year losses must be set off in full.
CGT rates for individuals: 18% (lower rate) / 24% (higher rate); 18% applies to the extent the taxable gain fits in the unused basic rate band. 24% applies to the rest.
Unused basic rate band: Unused band = £37,700 − taxable income (minimum nil); Taxable income is after the personal allowance and other reliefs, and excludes the gains themselves. Extended bands, for example from Gift Aid or personal pension contributions, increase the band.
Annual exempt amount: £3,000; Use it or lose it. It is deducted after current year losses.
Business asset disposal relief and investors' relief: 14% on qualifying gains; lifetime limit £1,000,000 for each relief; Check the conditions for the relief before applying the 14% rate.

How to solve Capital Gains Tax Rates and Annual Exempt Amount questions

Use this order for any CGT payable question. Do the steps in sequence and show each one.

1Compute the chargeable gain or allowable loss on each disposal, and note which gains qualify for business asset disposal relief or investors' relief.
2Net the current year gains and losses. A current year loss is always set off in full.
3Deduct brought forward capital losses, but only down to the annual exempt amount. Do not waste the exemption.
4Deduct the £3,000 annual exempt amount (or the part not already used) to reach the taxable gain.
5Work out taxable income after the personal allowance. Subtract it from £37,700 to find the unused basic rate band, with a minimum of nil.
6Tax the taxable gain at 18% up to the unused band and at 24% on the balance. Tax any relief-qualifying gains at 14%.
7Add up the tax and state the total CGT payable.

Quickest way: Band-split shortcut

When to use it: Use for multiple choice questions and for the final step of a written answer, when you already know the taxable gain and taxable income.

Taxable gain = gains − losses − £3,000, with losses used correctly.
Unused band = £37,700 − taxable income. If taxable income is £37,700 or more, the gain is all at 24%.
If the taxable gain is less than or equal to the unused band, tax = taxable gain × 18%.
Otherwise, tax = unused band × 18% + (gain − unused band) × 24%.
Check that the two slices add back to the taxable gain.

Common mistakes in Capital Gains Tax Rates and Annual Exempt Amount

Using total income instead of taxable income to find the unused basic rate band
Students forget the personal allowance is deducted before the band is used.
Fix: Deduct the personal allowance first. Only then subtract taxable income from £37,700.
Including the gain itself when working out how much of the basic rate band is used
Students add the gain to income by habit, as if it were income tax.
Fix: Gains sit on top of income. The band left over is based on taxable income only. Then the gain fills that remaining band.
Deducting the annual exempt amount before current year losses, or using brought forward losses in full
The order of set-off is not memorised.
Fix: Current year losses first, in full. Then brought forward losses only as far as needed to reach £3,000. Then the exempt amount.
Applying a different rate to residential property
Older rules had higher rates for residential property, and students remember them.
Fix: Use the ACCA rates table in the exam. It gives 18% and 24% for individuals. Do not invent other rates.
Applying 14% to every gain on business assets
Students see 'business' and assume the relief applies.
Fix: Check the conditions for business asset disposal relief or investors' relief. Only qualifying gains are taxed at 14%, up to the £1,000,000 lifetime limit.
Carrying forward an unused annual exempt amount
Students confuse it with losses, which can be carried forward.
Fix: Unused exempt amount is lost. Losses can be carried forward; the exemption cannot.

Worked examples

Example 1

Priya has taxable income of £30,000 for the tax year. She sells a second property and makes a chargeable gain of £20,000. She has no capital losses. Calculate her CGT payable. Use the 18% and 24% rates.

Show the solution

Gain £20,000 less annual exempt amount £3,000 = taxable gain £17,000.
Unused basic rate band = £37,700 − £30,000 = £7,700.
Gain in the basic rate band: £7,700 × 18% = £1,386.
Gain above the band: £17,000 − £7,700 = £9,300. £9,300 × 24% = £2,232.
Total CGT = £1,386 + £2,232 = £3,618.

Answer: CGT payable is £3,618.

Example 2

Omar has taxable income of £45,000. In the year he makes a gain of £15,000 on shares and a loss of £4,000 on a painting. He has £6,000 of capital losses brought forward. None of the gains qualify for business asset disposal relief. Calculate his CGT payable.

Show the solution

Net current year position: £15,000 − £4,000 = £11,000.
The exempt amount is £3,000, so £11,000 − £3,000 = £8,000 of gain is above it. The brought forward loss of £6,000 is less than this, so all of it is used.
Gain after brought forward losses: £11,000 − £6,000 = £5,000.
Deduct the annual exempt amount: £5,000 − £3,000 = £2,000 taxable gain.
Taxable income £45,000 exceeds £37,700, so there is no unused basic rate band. All of the gain is at 24%.
CGT = £2,000 × 24% = £480.

Answer: CGT payable is £480.

Exam tips

Write the taxable income line and the £37,700 comparison explicitly. Markers look for the unused band.
In objective questions, check whether the question gives taxable income or total income. Adjust for the personal allowance if needed.
Get the loss order right: current year losses, then brought forward losses down to £3,000, then the exempt amount. Show it as a short working.
Rates, the £3,000 exempt amount and the £1,000,000 relief limit are given in the exam tax tables. Spend your time on the computation, not on memorising.
Always finish with a clear total CGT figure, and show the 18% and 24% slices separately so you can earn method marks in Section C.

Practice questions from Gains and losses on the disposal of movable and immovable property

Capital Gains Tax Rates and Annual Exempt Amount in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalCGT Rates and the Annual Exempt Amount

Capital Gains Tax Rates and Annual Exempt Amount: frequently asked questions

What are the CGT rates for individuals in TX-UK?

The lower rate is 18% and the higher rate is 24%. Qualifying gains for business asset disposal relief or investors' relief are taxed at 14%. These come from the tax rates and allowances ACCA provides in the exam.

What is the annual exempt amount for CGT?

It is £3,000 for an individual. It is deducted from net gains after losses. If it is not used in the tax year, it is lost and cannot be carried forward.

Does residential property have a different CGT rate from other assets?

In the ACCA tax rates table for this exam, individuals have one pair of rates, 18% and 24%. The rate depends on your taxable income and the unused basic rate band, not on the type of asset. Only gains qualifying for business asset disposal relief or investors' relief use the 14% rate.

How do I find the unused basic rate band for CGT?

Take taxable income after the personal allowance and deduct it from £37,700. If the answer is negative, the unused band is nil. Taxable gains up to that figure are at 18%, and the rest at 24%.