Advanced Taxation (UK) · Capital gains tax: the basic principles of computing gains and losses

CGT Rates, Annual Exempt Amount and Payment in ATX-UK

Updated 11 October 2026 · Fact-checked

For individuals, CGT is charged on taxable gains after deducting the £3,000 annual exempt amount. Gains are taxed at 18% to the extent they fall in any unused basic rate band, and 24% above that. Your taxable income decides how much band is left. Reporting and payment rules differ for UK residential property.

Understand CGT Rates, Annual Exempt Amount and Payment

Capital gains tax is charged on gains an individual makes when disposing of chargeable assets. Before you think about rates, you work out the total chargeable gains for the tax year, deduct allowable losses, and then deduct the annual exempt amount.

The annual exempt amount is £3,000 in the tax tables ACCA gives you. It is a deduction from net gains, so it cannot create a loss or be carried forward. If you do not use it, it is lost.

The rate depends on your income. Taxable gains are treated as the top slice of your income. You first compute taxable income (after the personal allowance and reliefs). Any part of the basic rate band of £37,700 not used by taxable income is available for gains. Gains in that space are taxed at the lower rate of 18%. Gains above it are taxed at the higher rate of 24%.

The tables give 18% and 24% as the rates. Where Business Asset Disposal Relief or Investors' Relief applies, the rate is 14% on qualifying gains up to the £1,000,000 lifetime limit. That is covered in its own topic, but you must know it sits alongside these rates.

The tables also say to assume the 2025/26 rates and allowances continue unless told otherwise. So use these figures for any current-year question.

Key rules to remember

Taxable gains: Taxable gains = Total chargeable gains − allowable losses − annual exempt amount (£3,000); The annual exempt amount cannot exceed the net gains and cannot be carried forward if unused.
CGT rates for individuals: Lower rate 18%; higher rate 24%; The lower rate applies to gains within the unused basic rate band. The higher rate applies above it.
Unused basic rate band: Unused band = £37,700 − taxable income (not below nil); Taxable income is after the personal allowance and reliefs. Gains are the top slice, so they never reduce the band available to income.
Basic rate band extension: Band is increased by gross Gift Aid donations and gross personal pension contributions; This extends the basic rate band, leaving more space for the 18% rate.
Business Asset Disposal Relief rate: 14% on qualifying gains up to £1,000,000 lifetime limit; Investors' Relief has the same rate and the same limit. Gains above the limit are taxed at 18% or 24%.

How to solve CGT Rates, Annual Exempt Amount and Payment questions

Use this order for any question asking for CGT payable by an individual.

1Compute each gain or loss for the tax year and net them. Bring in current-year losses before anything else.
2Deduct brought-forward losses only as far as needed to reduce gains to the annual exempt amount. Current-year losses are set off in full.
3Deduct the £3,000 annual exempt amount. Best use it against gains taxed at the higher rate first, so that tax is saved at 24%.
4Work out taxable income for the year after the personal allowance. Add back any extension to the basic rate band for Gift Aid or pension contributions.
5Find the unused basic rate band: £37,700 (plus any extension) less taxable income.
6Tax gains up to the unused band at 18% and the rest at 24%. Apply 14% first to any gains qualifying for Business Asset Disposal Relief.
7State the filing and payment dates. Mention the 60-day rule if UK residential property is sold.

Quickest way: Band-space shortcut

When to use it: Use it when a question gives taxable income and a single net gain and wants the CGT bill quickly.

Write net gain minus £3,000.
Write £37,700 minus taxable income as the band space.
Multiply the smaller of the two figures by 18%.
Multiply any remaining gain by 24%.
Add the two amounts and round to the nearest £.

Common mistakes in CGT Rates, Annual Exempt Amount and Payment

Using income tax rates of 20% and 40% for gains.
Students link the basic rate band to income tax rates and forget that CGT has its own rates.
Fix: Use the band only to measure space. Apply 18% within it and 24% above it.
Using the personal allowance twice or deducting the annual exempt amount from income.
The two allowances sound similar.
Fix: The personal allowance reduces income. The £3,000 annual exempt amount reduces gains only.
Treating gains as part of income when finding the unused band.
Gains are the top slice, which students misread as being added to income first.
Fix: Taxable income uses the band first. Only what is left is available for gains.
Carrying forward an unused annual exempt amount or wasting it by deducting brought-forward losses.
Students set off all losses without checking the exempt amount.
Fix: Set off current-year losses in full. Use brought-forward losses only to bring gains down to £3,000.
Forgetting to extend the basic rate band for Gift Aid or pension payments.
The extension is mentioned in the scenario text rather than the figures.
Fix: Scan for gross donations and personal pension contributions and add them to £37,700.
Ignoring the 60-day deadline on UK residential property.
Students quote only the normal annual return date.
Fix: For disposals of UK residential property, mention reporting and paying within 60 days of completion, and say this is separate from the self-assessment return.

Worked examples

Example 1

Priya has taxable income of £30,000 for the year after deducting her personal allowance. She sold a painting for a chargeable gain of £20,000 and shares for a chargeable gain of £15,000. She has no losses. Compute her CGT.

Show the solution

Total gains: £20,000 + £15,000 = £35,000.
Less annual exempt amount £3,000 = taxable gains £32,000.
Unused basic rate band: £37,700 − £30,000 = £7,700.
Tax at 18%: £7,700 × 18% = £1,386.
Remaining gains: £32,000 − £7,700 = £24,300. Tax at 24%: £24,300 × 24% = £5,832.
Total CGT: £1,386 + £5,832 = £7,218.

Answer: Priya's CGT is £7,218.

Example 2

Tom has taxable income of £45,000. In the year he makes a chargeable gain of £10,000 on a shares sale and a current-year loss of £2,000 on another asset. He has brought-forward capital losses of £4,000. State his CGT and explain the treatment of the losses and exempt amount.

Show the solution

Net gains after current-year loss: £10,000 − £2,000 = £8,000.
Brought-forward losses are used only to reduce gains to the annual exempt amount: £8,000 − £3,000 = £5,000 set off.
Only £4,000 is available, so use £4,000. Gains become £4,000.
Less annual exempt amount £3,000 = taxable gains £1,000.
Taxable income £45,000 exceeds the £37,700 band, so none is left for gains.
CGT: £1,000 × 24% = £240.
No loss remains to carry forward. The annual exempt amount was fully used.

Answer: Tom's CGT is £240.

Exam tips

Show the unused basic rate band as a separate working. Marks are given for it even if a later figure is wrong.
Read the scenario for Gift Aid or personal pension contributions, as they extend the band and lower the CGT.
In a planning question, point out that using the annual exempt amount each year avoids losing it, and that transfers to a spouse can use two bands and two exemptions.
State payment dates when asked: normally 31 January following the tax year, but within 60 days of completion for UK residential property disposals.
Use the tax tables given in the exam. Do not rely on memory for rates.

Practice questions from Capital gains tax: the basic principles of computing gains and losses

CGT Rates, Annual Exempt Amount and Payment in other exams

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

ACCA Applied SkillsCGT Computation, Annual Exempt Amount and Rates

CGT Rates, Annual Exempt Amount and Payment: frequently asked questions

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

The tables give 18% as the lower rate and 24% as the higher rate. The lower rate applies to gains within any unused basic rate band and the higher rate applies above it. The tables also assume current rates continue unless the question says otherwise.

How is the CGT rate decided using the basic rate band?

Work out taxable income after the personal allowance. Subtract it from £37,700, plus any Gift Aid or pension extension. The positive balance is taxed at 18% and the rest of the taxable gains at 24%.

What is the annual exempt amount?

It is £3,000 in the ACCA tables. You deduct it from net gains after current-year losses. It cannot be carried forward or used against income.

When is CGT paid?

CGT is normally paid by 31 January following the end of the tax year of disposal. For UK residential property, a return and payment are due within 60 days of completion. Late payment gives rise to interest and potentially penalties.

Does residential property have a different CGT rate?

The ATX-UK tables list only the 18% and 24% rates, so the rates are the same as for other assets. The difference is in timing, as a separate report and payment are required within 60 days of completion.