Advanced Taxation (UK) · Capital gains tax: the scope of the taxation of capital gains

Chargeable Persons, Assets and Disposals for CGT

Updated 11 October 2026 · Fact-checked

A capital gain is taxable only when a chargeable person makes a chargeable disposal of a chargeable asset. Check all three tests. Individuals, trustees and personal representatives pay CGT; companies pay corporation tax on gains. Exempt persons, exempt assets or exempt disposals produce no charge. Then compute the gain.

Understand Chargeable Persons, Assets and Disposals for CGT

CGT is charged on gains, not on every receipt. Three tests must all be met. There must be a chargeable person, a chargeable disposal and a chargeable asset. If any one fails, there is no CGT. This is the first check in every ATX capital gains question.

Chargeable persons. Individuals, trustees and personal representatives are liable to CGT. Companies are not. They pay corporation tax on chargeable gains. Partners are taxed as individuals on their share of partnership gains. Charities are generally exempt where the gain is applied for charitable purposes. Whether a person is within the UK charge at all depends on residence, and sometimes on how the asset is used in the UK. Study that under the overseas aspects of CGT.

Chargeable disposals. A disposal is wider than a sale. It includes a gift, a sale at undervalue, an exchange, and a part disposal. It also includes the loss or destruction of an asset, for example when insurance money is received. Gifts are treated as made at market value, which can create a gain with no cash received. Some events are not disposals. A transfer on death is not a disposal by the deceased: the personal representatives acquire the assets at market value at the date of death (probate value), and the gain is wiped out. When the assets pass to the heirs, they acquire at that same value. Transfers between spouses or civil partners who are living together are made at no gain, no loss.

Chargeable assets. All forms of property are chargeable assets, unless specifically exempt. That includes land, shares, goodwill and assets held overseas. Exempt assets include cash in sterling, private cars, and the main residence (subject to the conditions of private residence relief). Others are chattels sold for £6,000 or less, wasting chattels, British government securities (gilts), qualifying corporate bonds, and assets held in ISAs. Savings certificates are also exempt. Betting winnings are not a gain on the disposal of an asset. They fall outside CGT as receipts. Exempt assets give no gain, and no allowable loss.

The exam tests this by giving you a list of transactions and asking which are taxable. Say why each one is in or out. A short reason earns the mark. Then apply the rates and the annual exempt amount from the tax tables ACCA gives you.

Key rules to remember

Three tests for a CGT charge: Chargeable person + chargeable disposal + chargeable asset = chargeable gain; All three must be present. If one fails, there is no CGT.
Disposal at market value: Gift or sale at undervalue: proceeds = market value; Applies where the transaction is a gift or is not a bargain at arm's length. Connected-person transfers also use market value.
Gain or loss: Gain = disposal proceeds − allowable costs; Use market value as proceeds where it applies. Exempt assets give no gain and no allowable loss.
Spouse or civil partner transfers: Transfer value = base cost (no gain, no loss); Applies where they are living together. The recipient takes over the original cost and date of acquisition.
Taxable amount: Taxable gain = chargeable gains − losses − annual exempt amount (£3,000); Individuals only. The tax tables give CGT rates of 18% and 24%. They also give a single rate of 14% for business asset disposal relief and investors' relief, each with a £1,000,000 lifetime limit.
Chattels exemption: Exempt if proceeds ≤ £6,000; The £6,000 limit is not in the tables you are given, so remember it. Above it, the gain is limited to 5/3 × (proceeds − £6,000).

How to solve Chargeable Persons, Assets and Disposals for CGT questions

Use this order for any scope question on persons, assets and disposals. It stops you computing gains that are not taxable.

1Identify who makes the disposal. Individual, trustee or personal representative means CGT. A company means corporation tax on chargeable gains.
2Check residence and any exemption for the person. A charity, for example, may be exempt. Overseas matters belong to the residence rules.
3Decide whether there is a disposal. Sale, gift, exchange, part disposal and loss or destruction count. Death does not.
4Check whether the asset is exempt. Look for cars, sterling cash, gilts, qualifying corporate bonds, ISAs and the main home. Test any chattel against the £6,000 limit.
5Check for no gain, no loss transfers, such as between spouses or civil partners living together.
6Set the proceeds at market value where it is a gift or sale at undervalue. Otherwise use actual proceeds.
7Compute the gain only for the chargeable items. Deduct losses and the £3,000 annual exempt amount, then apply 18% or 24%.
8State your conclusion for each item in one line, giving the reason.

Quickest way: Three-question screen

When to use it: Use this when a question lists several transactions and asks which are chargeable, with little time to spare.

Ask: who? Individual, trustee or personal representative is in. A company is out of CGT.
Ask: what happened? Sale, gift or loss of the asset is a disposal. Death is not. A transfer to a spouse is at no gain, no loss.
Ask: which asset? Cars, sterling, gilts, ISAs and the main home are out. Chattels at £6,000 or under are out.
Write one line per item: 'Chargeable', 'Exempt asset' or 'No gain no loss', with the reason. Only compute the chargeable ones.

Common mistakes in Chargeable Persons, Assets and Disposals for CGT

Charging CGT on a company's gain.
Students see the word 'gain' and apply CGT rates automatically.
Fix: Companies pay corporation tax on chargeable gains. CGT applies to individuals, trustees and personal representatives.
Treating a gift as having no tax effect because no money was received.
Students link tax to cash.
Fix: A gift is a disposal at market value. Use market value as the proceeds, unless a relief or no gain, no loss rule applies.
Taxing a gain on death.
Students confuse CGT with inheritance tax.
Fix: Death is not a disposal for CGT. The personal representatives acquire the assets at market value at the date of death (probate value), and the heirs then acquire at that same value, so the gain is wiped out.
Allowing a loss on an exempt asset.
Students think losses are always useful.
Fix: If the asset is exempt, the loss is not allowable either. Check exemption first, before computing.
Taxing the full gain on a chattel sold above £6,000.
Students forget the 5/3 rule and use the whole gain.
Fix: The gain is the lower of the normal gain and 5/3 × (proceeds − £6,000). The £6,000 limit is not in the tables, so remember it.
Taxing transfers between spouses at market value.
Students apply the gift rule without checking the relationship.
Fix: Spouses or civil partners living together transfer at no gain, no loss. The recipient inherits the cost and acquisition date.

Worked examples

Example 1

Maya, a UK resident individual, in the year made these disposals: (1) sold her private car at a gain of £4,000; (2) sold gilts at a gain of £6,000; (3) gave her husband, who lives with her, shares worth £50,000 that cost £20,000; (4) sold a painting for £9,000 that cost £2,000 (assume a chattel); (5) sold shares for a gain of £15,000. State which are chargeable and compute her CGT, assuming her taxable income is high enough that all gains fall in the 24% band. Painting gain test: 5/3 rule applies.

Show the solution

Persons: Maya is an individual, so CGT applies.
Car: private cars are exempt assets. No gain.
Gilts: British government securities are exempt. No gain.
Gift to husband: spouses living together, so no gain, no loss. The transfer is at £20,000 cost and no gain arises.
Painting: proceeds £9,000 exceed £6,000, so the chattel exemption is lost. Normal gain = £9,000 − £2,000 = £7,000. The 5/3 limit = 5/3 × (£9,000 − £6,000) = 5/3 × £3,000 = £5,000. The gain is the lower, £5,000.
Shares: gain £15,000 is chargeable.
Total chargeable gains = £5,000 + £15,000 = £20,000.
Deduct the annual exempt amount of £3,000: taxable gain = £17,000.
CGT at 24% = £17,000 × 24% = £4,080.

Answer: Chargeable: the painting (gain £5,000) and the shares (gain £15,000). Exempt or no gain no loss: the car, the gilts and the spousal gift. Taxable gain after the annual exempt amount is £17,000, and CGT is £4,080.

Example 2

Explain whether CGT arises in each case: (a) Omar, an individual, dies owning shares standing at a gain of £80,000 at the date of death; (b) Zenith Ltd sells land at a gain of £100,000; (c) Priya gives a rental property worth £300,000, which cost £120,000, to her adult son.

Show the solution

(a) Death is not a disposal by the deceased. No CGT arises on the £80,000 gain. The personal representatives acquire the shares at market value at the date of death (probate value), and the heirs then acquire at that same value, so the gain is wiped out.
(b) Zenith Ltd is a company, so it is not within CGT. The £100,000 gain is a chargeable gain, taxed under corporation tax.
(c) Priya is an individual. A gift is a disposal at market value. Her son is not a spouse, so no gain, no loss does not apply. The rental property is a chargeable asset.
Gain = £300,000 − £120,000 = £180,000, before any relief such as gift holdover relief, and before her annual exempt amount.
Tax is due at the 18% or 24% rates. The 24% rate applies to gains falling above the basic rate band, for all assets, so the rate depends on her taxable income and the size of the gain.

Answer: (a) No CGT; the gain is wiped out on death. (b) No CGT; corporation tax on the chargeable gain. (c) CGT arises on a gain of £180,000, before reliefs and the £3,000 annual exempt amount.

Exam tips

Start every CGT answer by stating the person, the disposal and the asset. Examiners give marks for identifying why something is not chargeable.
Write one clear line of reason for each exempt item. A bare 'exempt' earns little.
Remember the £6,000 chattel limit and the 5/3 rule. They are not in the tax tables you are given.
Link the scope check to the scenario. For example, say if a gift to a spouse makes tax planning possible through transfers before a sale.
Gifts at market value can create a tax bill with no cash. Mention the cash-flow point and any holdover relief, as that shows commercial awareness.

Practice questions from Capital gains tax: the scope of the taxation of capital gains

Chargeable Persons, Assets and Disposals for CGT 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

Chargeable Persons, Assets and Disposals for CGT: frequently asked questions

Who pays capital gains tax in the UK?

Individuals, trustees and personal representatives pay CGT. Companies do not; they pay corporation tax on chargeable gains. Residence status can affect whether a gain is within the UK charge.

What counts as a chargeable disposal for CGT?

A sale, a gift, an exchange, a part disposal, and the loss or destruction of an asset all count. A gift is treated as made at market value. Death is not a disposal by the person who dies.

Which assets are exempt from CGT?

Main exempt assets include private cars, sterling cash, gilts, qualifying corporate bonds, ISA investments and, subject to conditions, the main home. Chattels sold for £6,000 or less are also exempt. Losses on exempt assets are not allowable.

What is the difference between a chargeable and an exempt disposal?

A chargeable disposal creates a gain or loss that goes into the CGT computation. An exempt disposal is outside the charge, so the gain is not taxed and the loss cannot be used. Exemption can come from the asset or from the person.