Taxation (UK) · The basic principles of computing gains and losses

Chargeable Persons, Disposals and Chargeable Assets in TX-UK

Updated 11 October 2026 · Fact-checked

A capital gain is taxable only if a chargeable person makes a chargeable disposal of a chargeable asset. Individuals pay capital gains tax; companies pay corporation tax on gains. A disposal includes a sale or gift. Some assets, such as cars and gilts, are exempt. Check person, disposal and asset in turn.

Understand Chargeable Persons, Disposals and Chargeable Assets

Capital gains tax (CGT) charges tax on the profit when you dispose of certain assets. Before you compute any gain, you must pass three tests. There must be a chargeable person, a chargeable disposal and a chargeable asset. Fail any test and there is no gain to tax.

Chargeable persons are individuals (including partners, who are taxed on their share of partnership gains), trustees and personal representatives, who pay CGT. Companies are also chargeable, but they pay corporation tax on their gains, not CGT. An individual is chargeable on gains from worldwide assets if UK resident. A non-resident individual is generally not chargeable on gains from UK assets, though there are special rules for UK land which are outside this topic. Residence is decided by the statutory residence test: spending 183 or more days in the UK makes you automatically resident, and fewer than 16 days makes you automatically not resident. In between, the number of UK ties and whether you were previously resident decide the outcome.

A chargeable disposal covers a sale, a gift, an exchange, and the loss or destruction of an asset. It also covers receiving a capital sum for an asset, for example an insurance payout. A gift is treated as a sale at market value, so a gain can arise even though you receive no cash. A transfer on death is not a disposal. The beneficiary takes the asset at its market value at death.

A chargeable asset is any form of property, including land, buildings, shares, goodwill and personal possessions. Some assets are exempt, so gains and losses on them are ignored. Key exempt assets are cars, UK government securities (gilts), qualifying corporate bonds and assets held in ISAs. Chattels (tangible movable items) are also covered. Wasting chattels, with a predictable life of 50 years or less, are exempt. Non-wasting chattels are exempt where both the cost and the proceeds are £6,000 or less.

Exempt assets are a different point from disposals where no gain or loss arises. A transfer of a chargeable asset between spouses or civil partners living together is made at no gain, no loss. A gift of a chargeable asset to a charity is a separate rule: it is treated as made for proceeds equal to cost, so no gain or loss arises. In both cases the asset remains chargeable, so it is not an exempt asset. Do not describe the charity rule as the same rule as the spouse transfer.

Think of it as a filter. Start with the transaction, apply the three tests, and only then move on to the gain computation, annual exempt amount and rates.

Key rules to remember

Three tests for a CGT charge: Chargeable person + chargeable disposal + chargeable asset = chargeable gain or allowable loss; All three must be met. If an asset is exempt, the loss is also ignored.
Statutory residence test: automatic UK residence: 183 or more days in the UK = automatically resident; fewer than 16 days = automatically not resident; For 16 to 182 days, use the ACCA table of days and UK ties. It depends on whether the person was previously resident.
Tie thresholds, previously resident: 16 to 45 days: 4 ties; 46 to 90: 3 ties; 91 to 120: 2 ties; 121 to 182: 1 tie; Resident if the person has at least this many ties.
Tie thresholds, not previously resident: 16 to 45 days: automatically not resident; 46 to 90: 4 ties; 91 to 120: 3 ties; 121 to 182: 2 ties; Resident if the person has at least this many ties.
Gift disposal proceeds: Gifts, and sales at undervalue to connected persons = deemed made at market value; exceptions: transfers to a spouse or civil partner living together (no gain, no loss) and gifts of chargeable assets to a charity (proceeds equal to cost, so no gain or loss); The exceptions are not exempt assets. The asset is still chargeable, but no gain or loss arises on the transfer. The spouse rule and the charity rule are separate rules.
CGT annual exempt amount (for reference): £3,000 per individual; Given in the tax tables. It is applied after gains are computed.

How to solve Chargeable Persons, Disposals and Chargeable Assets questions

Use this order for any question on who is taxed on a transaction. Write one line per test.

1Identify the person. Is it an individual, a company, a trustee or a partner? Companies pay corporation tax on gains, not CGT.
2If an individual, test residence. Count UK days and UK ties using the table, and note whether the person was previously resident.
3Identify the event. Is it a sale, gift, exchange, loss or destruction, or receipt of a capital sum? A transfer on death is not a disposal.
4Identify the asset. Check for exempt assets: cars, gilts, qualifying corporate bonds, ISA investments, wasting chattels (predictable life of 50 years or less), and non-wasting chattels where both cost and proceeds are £6,000 or less.
5Check for gifts where no gain or loss arises. A transfer to a spouse or civil partner living together is at no gain, no loss. A gift of a chargeable asset to a charity is treated as made for proceeds equal to cost, so no gain or loss arises. These are separate rules, and neither makes the asset exempt.
6State the conclusion in one sentence, for example 'chargeable gain', 'exempt' or 'no gain or loss'.
7Only if chargeable, move on to compute the gain, deduct losses and the annual exempt amount, and apply the rates.

Quickest way: Three-question filter

When to use it: Use for Section A and Section B objective questions that ask whether a gain is chargeable or which item is exempt.

Ask: who is the person? A company means corporation tax.
Ask: is it a disposal? A death is not a disposal. A gift is, at market value, unless it is to a spouse or civil partner living together (no gain, no loss) or to a charity (proceeds equal to cost, so no gain or loss).
Ask: is the asset on the exempt list? Cars, gilts, qualifying corporate bonds, ISA assets, wasting chattels, and non-wasting chattels with cost and proceeds both £6,000 or less.
For residence, go straight to the table. Under 16 days or 183 or more days settle it with no ties needed.
Pick the option that matches your conclusion. Check that every part of a multi-part option is true.

Common mistakes in Chargeable Persons, Disposals and Chargeable Assets

Saying a gift is not a disposal because no money was received.
Students link tax with cash proceeds.
Fix: Treat a gift as a disposal at market value, unless a special rule applies. A gift to a spouse or civil partner living together is at no gain, no loss. A gift of a chargeable asset to a charity is treated as made for proceeds equal to cost, so no gain or loss arises.
Treating death as a chargeable disposal.
Death feels like a final transfer of the asset.
Fix: There is no CGT on death. The beneficiary acquires the asset at its market value at the date of death. Inheritance tax may apply instead.
Applying CGT to a company's gain.
The word 'capital gains' is linked only to individuals.
Fix: Companies are chargeable persons but pay corporation tax on their chargeable gains. CGT rates and the annual exempt amount do not apply to them.
Using the wrong column of the residence table.
Students forget to check if the person was previously resident.
Fix: Read the facts for prior residence first. A not-previously-resident person with 16 to 45 days is automatically not resident.
Relieving a loss on an exempt asset.
Students focus on the loss rather than the asset's status.
Fix: If the asset is exempt, both gains and losses are ignored. A loss on a car cannot be set against other gains.
Assuming all personal possessions are exempt, or that only wasting chattels are exempt.
Students mix up cars and chattels, or forget the £6,000 limit.
Fix: Cars are always exempt. Wasting chattels (predictable life of 50 years or less) are exempt. Non-wasting chattels are exempt where both cost and proceeds are £6,000 or less. Above that limit, the detailed chattel rules apply.

Worked examples

Example 1

Priya is an individual who was resident in the UK in the previous tax year. In the current tax year she spent 100 days in the UK and has two UK ties. She sells a block of shares in a US company at a gain. Is she a chargeable person on this gain?

Show the solution

Priya is an individual, so she pays CGT if UK resident.
She was previously resident, so use that column of the table.
With 91 to 120 days, a previously resident person is resident if she has 2 UK ties or more.
She has 2 ties, so she meets the test and is UK resident.
A UK resident individual is chargeable on gains from worldwide assets, so the US shares do not matter.

Answer: Priya is UK resident and chargeable to CGT on the gain on the US shares.

Example 2

During the year Marcus (a UK resident individual) did the following: (a) sold his private car at a loss of £4,000; (b) gave quoted shares worth £20,000 to his adult daughter, which cost him £12,000; (c) gave a painting to his wife, with whom he lives; (d) sold gilts at a gain of £6,000. State the CGT treatment of each.

Show the solution

(a) A private car is an exempt asset. The £4,000 loss is ignored and cannot be used against other gains.
(b) A gift is a disposal at market value. The daughter is not a spouse, so no relief applies. The gain is £20,000 − £12,000 = £8,000, before any other relief.
(c) A transfer to a spouse living together is at no gain, no loss, so no gain or loss arises for Marcus.
(d) Gilts are exempt assets. The £6,000 gain is not chargeable.

Answer: (a) exempt, loss ignored; (b) chargeable gain of £8,000; (c) no gain, no loss; (d) exempt, gain ignored.

Exam tips

In objective tests, an option may be partly right. Check each part, as no partial marks are given.
Learn the exempt list as a short phrase: cars, gilts, qualifying corporate bonds, ISAs, wasting chattels, and chattels with cost and proceeds both £6,000 or less.
In a Section C answer, write one line on each of person, disposal and asset before computing. Examiners reward clear conclusions.
Use the residence table given in the exam. Do not learn it blindly; practise reading it by days, ties and previous residence.
Remember that gifts are at market value, except gifts to a spouse or civil partner living together (no gain, no loss) and gifts of chargeable assets to a charity (proceeds equal to cost, so no gain or loss). Keep these as two separate rules. If the question gives a market value for any other gift, use it and not the cost.

Practice questions from The basic principles of computing gains and losses

Chargeable Persons, Disposals and Chargeable Assets 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 ProfessionalChargeable Persons, Assets and Disposals for CGT

Chargeable Persons, Disposals and Chargeable Assets: frequently asked questions

What is a chargeable disposal for CGT in TX-UK?

It is a sale, gift, exchange, loss or destruction of a chargeable asset, or receipt of a capital sum for it. A gift is treated as made at market value. The exceptions are a transfer to a spouse or civil partner living together, which is at no gain, no loss, and a gift of a chargeable asset to a charity, which is treated as made for proceeds equal to cost so no gain or loss arises. A transfer on death is not a disposal.

Which assets are exempt from CGT?

The main exempt assets are private cars, UK government securities (gilts), qualifying corporate bonds, investments held in ISAs, and wasting chattels. Non-wasting chattels are also exempt where both cost and proceeds are £6,000 or less. Gains on exempt assets are not taxed and losses are not allowable.

Do companies pay capital gains tax?

No. Companies are chargeable persons, but they pay corporation tax on their chargeable gains. The CGT rates and the £3,000 annual exempt amount apply only to individuals and certain others, not companies.

How does residence affect CGT for individuals?

A UK resident individual is chargeable on gains from assets anywhere in the world. Residence is decided by the statutory residence test, using days in the UK, UK ties and whether the person was previously resident.