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

Chargeable Persons, Assets and Computing a Gain in ACCA Taxation (UK)

Updated 11 October 2026 · Fact-checked

Capital gains tax is charged on individuals who make a chargeable disposal of a chargeable asset. Compute the gain as disposal proceeds less allowable costs (acquisition cost and enhancement or disposal expenditure). Then deduct losses and the annual exempt amount of £3,000, and apply 18% or 24%.

Understand Chargeable Persons, Assets and Computing a Gain

Capital gains tax (CGT) taxes the profit you make when you dispose of an asset. In TX-UK, the person is usually an individual, who is chargeable if they are UK resident. Trustees and personal representatives are also chargeable persons, but companies pay corporation tax on their gains instead.

Three things must all be present for a gain to arise: a chargeable person, a chargeable disposal and a chargeable asset. If any one is missing, there is no CGT. Start every question by checking these.

A disposal is wider than a sale. It includes a gift, an exchange, and the loss or destruction of an asset. A gift is treated as made at market value, not at the nil price paid. Transfers on death are not chargeable disposals, and the person who inherits takes the asset at its market value at death.

Most assets are chargeable: land and buildings, shares, goodwill and personal possessions. Some assets are exempt, such as cars and your main home in most cases (covered under other topics). Exempt assets produce no gain and no allowable loss.

The gain is the proceeds less the allowable costs. The date of disposal matters because it decides the tax year in which the gain falls. This is normally the date of an unconditional contract, not the date of completion.

Key rules to remember

Chargeable gain: Disposal proceeds − allowable costs = chargeable gain; Proceeds are market value if the disposal is a gift.
Allowable costs: Acquisition cost + incidental costs of acquisition + enhancement expenditure + incidental costs of disposal; Enhancement must still be reflected in the asset at disposal. Routine repairs and maintenance are not allowable.
Taxable gains: Net gains for the year − current-year losses − brought-forward losses (as needed) − annual exempt amount (£3,000) = taxable gains; Current-year losses are set off in full. Brought-forward losses are used only to reduce gains down to the annual exempt amount.
CGT rates: 18% within the basic rate band; 24% above it; Use any unused basic rate band after taxable income. Business asset disposal relief is at 14% (lifetime limit £1,000,000).
Date of disposal: Date of unconditional contract, not completion; The tax year of the contract date decides which annual exempt amount and rates apply.

How to solve Chargeable Persons, Assets and Computing a Gain questions

Use the same order every time. It protects marks even if you get a number wrong.

1Check the person: is the taxpayer an individual (or trustee or personal representative) who is UK resident? If it is a company, stop and use corporation tax rules.
2Check the disposal: is it a sale, gift, exchange or loss? Note the date of the unconditional contract and the tax year.
3Check the asset: is it chargeable or exempt (for example a car)? Exempt means no gain and no loss.
4Find proceeds: use the sale price, or market value for a gift or a sale at undervalue to a connected person.
5Deduct allowable costs: purchase cost, incidental costs of buying and selling, and enhancement expenditure. Ignore repairs and finance costs.
6Net off losses in the same year, then brought-forward losses, then deduct the £3,000 annual exempt amount.
7Apply 18% or 24% according to the basic rate band left after taxable income. Show the tax due.

Quickest way: Proceeds-less-costs table

When to use it: Use it in Section A and B objective questions where you need a single gain figure quickly.

Write three lines: Proceeds, Less costs, Gain.
Put market value in proceeds if it is a gift. Add every cost to one total, including fees on both sides.
Subtract, then deduct the £3,000 annual exempt amount only if the question asks for taxable gains.
If the answer is negative, it is a loss, not a gain. Check the asset is chargeable first.

Common mistakes in Chargeable Persons, Assets and Computing a Gain

Using nil proceeds for a gift.
Students see no money received and assume no gain.
Fix: A gift is a disposal. Use market value at the date of the gift as proceeds.
Deducting repairs, insurance or interest as allowable costs.
They look like costs of owning the asset.
Fix: Only acquisition, enhancement and incidental costs of buying and selling are allowable.
Treating a gain or loss on an exempt asset like a normal one.
The asset type is not checked at the start.
Fix: Check exemptions first. An exempt asset gives no gain and no allowable loss.
Using the completion date as the disposal date.
Students link the disposal to when money changes hands.
Fix: Use the date of the unconditional contract to fix the tax year.
Deducting the annual exempt amount before netting losses, or wasting it with brought-forward losses.
The order of set-off is not remembered.
Fix: Current-year losses first in full, then deduct brought-forward losses only as needed to reduce gains to £3,000.
Applying CGT to a company.
The question wording mentions a gain without a person type.
Fix: Companies pay corporation tax on gains. CGT rates and the annual exempt amount are for individuals.

Worked examples

Example 1

Priya, a UK resident individual, bought a plot of land for £62,000 in 2016, paying legal fees of £1,500. In 2020 she spent £14,000 on a drainage system that is still reflected in the land. She sold the land on 10 August 2026 for £120,000, paying agent's fees of £2,000. She has no other disposals and no losses. Compute her taxable gain.

Show the solution

Person, disposal and asset: Priya is a UK resident individual, a sale is a disposal, and land is chargeable.
Proceeds: £120,000.
Allowable costs: purchase £62,000 + legal fees £1,500 + enhancement £14,000 + agent's fees £2,000 = £79,500.
Gain: £120,000 − £79,500 = £40,500.
Annual exempt amount: £40,500 − £3,000 = £37,500 taxable gain.

Answer: Chargeable gain £40,500; taxable gain after the annual exempt amount £37,500.

Example 2

Tom, a UK resident individual, gave a painting to his nephew on 5 December 2026. He had bought it for £8,000 in 2018. Its market value at the gift date was £30,000. Tom has no other disposals. He is an additional rate taxpayer with no losses. Compute the CGT payable. Assume the painting is a chargeable asset and no relief applies.

Show the solution

Disposal: a gift is a chargeable disposal, even though Tom receives nothing.
Proceeds: use market value of £30,000.
Allowable costs: £8,000.
Gain: £30,000 − £8,000 = £22,000.
Annual exempt amount: £22,000 − £3,000 = £19,000.
Tom is an additional rate taxpayer, so his basic rate band is used up. The 24% higher rate applies.
CGT: £19,000 × 24% = £4,560.

Answer: CGT payable is £4,560.

Exam tips

Begin every answer with a quick check of person, disposal and asset. Examiners reward this and it catches exempt assets.
Always show the layout: proceeds, costs, gain. Marks are awarded for each component even if the total is wrong.
For gifts, write 'market value' as the proceeds label. This is a common scoring point.
In objective tests, read for the word 'taxable' or 'chargeable'. Chargeable is before the annual exempt amount, taxable is after.
Quote the rates from the tax rates and allowances ACCA provides. Do not rely on memory for the annual exempt amount.

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

Chargeable Persons, Assets and Computing a Gain in other exams

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

Chargeable Persons, Assets and Computing a Gain: frequently asked questions

Who is liable to capital gains tax in TX-UK?

UK resident individuals, trustees and personal representatives are chargeable to CGT. Companies pay corporation tax on their chargeable gains instead.

What counts as a chargeable disposal?

A sale, gift, exchange, or the loss or destruction of an asset. A transfer on death is not a chargeable disposal. The person who receives the asset takes it at its market value at death.

Which costs can I deduct when computing a gain?

You can deduct the purchase price, incidental costs of buying such as legal fees, enhancement expenditure reflected in the asset, and incidental costs of selling. Repairs, insurance and interest are not allowable.

What is the annual exempt amount for CGT?

For this exam it is £3,000 for an individual. It is deducted after losses to give the taxable gain.