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

Scope of CGT: Chargeable Persons, Assets and Disposals

Updated 11 October 2026 · Fact-checked

Capital gains tax is charged on individuals, trustees and personal representatives who make a chargeable gain on a chargeable disposal of a chargeable asset. Companies pay corporation tax on gains instead. Check the person, the asset and the disposal in turn. Exempt assets and exempt persons fall outside the charge.

Understand Scope of CGT and Chargeable Persons and Assets

CGT is a tax on the gain you make when you dispose of an asset. It is not a tax on owning the asset. No disposal means no gain to tax, however much the asset has risen in value.

For a charge to arise, three things must all be present. You need a chargeable person, a chargeable asset and a chargeable disposal. If any one is missing, there is no CGT. Exam questions often hide the answer in one of these three.

Chargeable persons are individuals, trustees and personal representatives. Partners are taxed as individuals on their share of a partnership gain. Companies are not within CGT. They pay corporation tax on their chargeable gains. Charities are generally exempt on gains applied for charitable purposes. Whether a person is within the UK charge depends on residence, and sometimes on how the asset is used. That is covered in the overseas topics.

Chargeable assets are all forms of property, wherever situated, unless they are specifically exempt. This includes land, buildings, shares, goodwill, and interests in assets. Common exempt assets are your only or main home (through private residence relief, which is a relief rather than a true exemption), cash in sterling, cars, UK government gilts and qualifying corporate bonds, ISA investments, wasting chattels such as racehorses and yachts, and chattels sold for £6,000 or less. Betting and lottery winnings, and decorations for valour that were not purchased, are also outside the charge. Learn the list and be ready to spot it.

Disposals include a sale, a gift, an exchange, and the loss or destruction of an asset. They also include receiving a capital sum, such as insurance money for a damaged asset. A part disposal counts. Transfers between spouses or civil partners who live together are treated as made at no gain and no loss. A transfer on death is not a disposal by the deceased. The beneficiary takes the asset at its probate value. A gift is a disposal at market value, and so is a sale to a connected person.

Key rules to remember

Three tests for a CGT charge: Chargeable person + chargeable asset + chargeable disposal = chargeable gain (if any); All three must be present. If one fails, stop and explain why no CGT arises.
Disposal at market value: Gift or sale to a connected person: proceeds = market value at the date of disposal; Applies even if the person gave the asset away or sold it cheaply.
Transfers between spouses or civil partners: Disposal proceeds = acquisition cost (no gain, no loss); Applies where the couple are living together in the tax year. The receiving spouse takes over the original cost and date.
Death: No CGT on the deceased's assets at death; beneficiary's cost = probate value; Gains on assets disposed of before death are still taxable in the deceased's final year.
CGT rates 2025/26: Lower rate 18%; higher rate 24%; annual exempt amount £3,000; Given in the tax tables. Companies do not use these.
Chattel exemption: Proceeds of £6,000 or less: exempt; Marginal relief caps the gain at 5/3 × (proceeds − £6,000) for proceeds just above £6,000. Applies to non-wasting chattels.

How to solve Scope of CGT and Chargeable Persons and Assets questions

Use this method for any scope question, whether it asks about one disposal or a list of several.

1List each event in the scenario. Decide whether it is a disposal: sale, gift, exchange, loss, destruction or capital sum received.
2Identify the person. Individual, trustee or personal representative falls within CGT. A company falls under corporation tax.
3Check residence and any overseas link if the person or asset is outside the UK.
4Test the asset against the exempt list: cars, sterling cash, gilts, qualifying corporate bonds, ISAs, wasting chattels, chattels of £6,000 or less, main home.
5Apply special rules: spouse transfers at no gain no loss, death is not a disposal, gifts and connected-party sales use market value.
6Compute any gain only if the question asks. Use proceeds less cost, then losses and the £3,000 annual exempt amount.
7State your conclusion for each item clearly, with a one-line reason, so the marker can award each mark.

Quickest way: Person, asset, disposal checklist

When to use it: Use it when a question lists several transactions and asks which are chargeable.

Write a three-column grid: person, asset, disposal.
Tick or cross each column for every transaction.
Any cross means no CGT. Write the reason in a few words.
Only compute gains for items with three ticks.
Note market value for gifts and connected-party deals.

Common mistakes in Scope of CGT and Chargeable Persons and Assets

Charging CGT on a company's gains.
Students see the word gain and apply the individual's rates.
Fix: Companies pay corporation tax on chargeable gains. Use CGT only for individuals, trustees and personal representatives.
Treating a gift as having no tax effect because no money was received.
Students link CGT to cash proceeds.
Fix: A gift is a disposal. Use market value as proceeds. Spouse transfers are the exception.
Charging CGT on the deceased at death.
Death looks like a transfer of the asset.
Fix: Death is not a disposal. The beneficiary acquires at probate value and the gain up to death is wiped out.
Treating all cars and chattels as exempt.
Students remember cars and the £6,000 rule but mix up the details.
Fix: Cars are exempt. Other chattels are exempt only if proceeds are £6,000 or less, and wasting chattels are exempt regardless. Check each asset.
Forgetting that a capital sum received, such as insurance money, can be a disposal.
Students look only for a sale or gift.
Fix: Treat loss, destruction and capital sums derived from an asset as disposals, then consider any available reliefs.
Calling the main home an exempt asset without checking conditions.
Students learn it as a one-line exemption.
Fix: Private residence relief depends on occupation and periods of absence. Say it is a relief and check the facts.

Worked examples

Example 1

In 2025/26, Priya (a UK resident individual) made these disposals: (1) sold a car for £18,000 which cost £12,000; (2) sold a painting for £5,500 which cost £2,000; (3) gave shares worth £30,000, which cost £10,000, to her friend; (4) gave an investment property worth £200,000 to her husband, with whom she lives. Which disposals give rise to a chargeable gain, and what is the gain?

Show the solution

Car: it is an exempt asset, so no CGT despite the £6,000 profit.
Painting: it is a non-wasting chattel sold for £5,500, which is £6,000 or less, so it is exempt.
Shares: the gift is a disposal at market value. Gain = £30,000 − £10,000 = £20,000.
Property: a transfer between spouses living together is no gain, no loss. The husband takes over Priya's original cost.
Only the share gift is chargeable. The gain is £20,000, before losses and the £3,000 annual exempt amount.

Answer: Only the gift of shares is chargeable. The gain is £20,000 before the annual exempt amount. The car and painting are exempt and the spouse transfer is no gain, no loss.

Example 2

Ben, a UK resident individual, sold a non-wasting chattel in 2025/26 for £8,000. It cost him £2,000. Calculate the chargeable gain and explain the rule used.

Show the solution

Proceeds of £8,000 exceed £6,000, so the chattel is not fully exempt.
Normal gain = £8,000 − £2,000 = £6,000.
Marginal relief caps the gain at 5/3 × (£8,000 − £6,000) = 5/3 × £2,000 = £3,333, rounded to the nearest £.
The gain is the lower of £6,000 and £3,333, which is £3,333.

Answer: The chargeable gain is £3,333, because the 5/3 marginal relief cap is lower than the actual gain of £6,000.

Exam tips

Always state the reason for an exemption or non-disposal. Marks go for the rule, not just the conclusion.
Watch for spouses, death and companies in the scenario. They are the usual traps in scope questions.
Use the tax tables for rates and the annual exempt amount. Do not recall them from memory.
Where a scenario involves an overseas person or asset, flag that residence needs checking and link to the overseas topics.
Write short, clear sentences for each item. Professional skills marks reward a clear, structured answer.

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

Scope of CGT and Chargeable Persons and 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 Applied SkillsChargeable Persons, Assets and Disposals

Scope of CGT and Chargeable Persons and Assets: frequently asked questions

Who pays capital gains tax in the UK?

Individuals, trustees and personal representatives pay CGT on chargeable gains. Partners are taxed on their share of partnership gains. Companies pay corporation tax on their chargeable gains instead.

Which assets are exempt from CGT?

Common exempt assets include cars, sterling cash, gilts, qualifying corporate bonds, ISA investments and wasting chattels. Chattels sold for £6,000 or less are also exempt. Your main home is covered by private residence relief, subject to conditions.

Is a gift a chargeable disposal for CGT?

Yes. A gift is a disposal and you use market value as the proceeds. The main exception is a transfer between spouses or civil partners living together, which is no gain, no loss.

Is there CGT on death?

No. Death is not a disposal by the deceased, so there is no CGT on the assets held at death. The beneficiary acquires them at probate value.