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

Computing Capital Gains and Losses and CGT Deadlines

Updated 11 October 2026 · Fact-checked

Compute each disposal as proceeds less allowable costs. Net the gains and losses of the tax year. Use brought forward losses only to bring the net gain down to the annual exempt amount (£3,000). Tax the rest at 18% or 24%, depending on the unused basic rate band. Report and pay on time.

Understand Computing Gains and Losses and Reporting Deadlines

A chargeable gain is the profit on disposing of a chargeable asset. You work it out disposal by disposal. Start with the proceeds, deduct the costs, and the result is a gain or a loss. You then combine all the results for the tax year (6 April to 5 April).

Proceeds are the sale price. If the asset is gifted or sold to a connected person, use market value instead. Deduct the incidental costs of selling, such as legal and agent fees. Then deduct the allowable cost. That is the original price, the incidental costs of buying, and enhancement expenditure that is still reflected in the asset at disposal. Day-to-day repairs are not allowable.

Losses have strict rules. A loss in the same tax year is set against gains of that year in full. You cannot choose to leave gains in to use the annual exempt amount. A loss brought forward from an earlier year is different. You use only as much as needed to reduce the net gain to the annual exempt amount, and the rest carries forward. Losses cannot be carried back, except in the year of death. A loss on a disposal to a connected person can only be set against gains on disposals to that same person.

After the losses, deduct the annual exempt amount of £3,000. The taxable gain is taxed on top of taxable income. Gains within any unused basic rate band are taxed at 18%. The rest is taxed at 24%. Business asset disposal relief, where it applies, is taxed at 14% for the 2025/26 tax rates in the tax tables, up to a £1,000,000 lifetime limit.

Timing matters for cash flow. Gains are normally reported on the self-assessment return, and the tax is due on 31 January after the end of the tax year. A disposal of UK residential property that produces tax to pay must also be reported, and the tax paid on account, within 60 days of completion. Always check this in a property scenario.

Key rules to remember

Chargeable gain or allowable loss: Proceeds (or market value) − incidental costs of disposal − allowable cost (acquisition cost + incidental costs of acquisition + enhancement expenditure); A negative answer is an allowable loss. Use market value for gifts and for sales to connected persons.
Current year loss rule: Net gains of the year = gains − losses of the same year; Set off in full, even if this wastes the annual exempt amount.
Brought forward loss rule: Loss used = lower of (losses b/f) and (net current gains − £3,000); The balance is carried forward. It is never used if the net gain is £3,000 or less.
Taxable gain: Net gains after losses − annual exempt amount (£3,000); The annual exempt amount cannot be carried forward or back.
CGT rates: 18% on gains within the unused basic rate band; 24% on the rest; Work out the unused band as the basic rate band less taxable income. Business asset disposal relief gains are taxed at 14%.
Reporting and payment dates: UK residential property: 60 days from completion. Other gains: return and tax by 31 January after the tax year.; Tax paid within 60 days is a payment on account of the year's liability.

How to solve Computing Gains and Losses and Reporting Deadlines questions

Use the same order every time. It stops you from missing the loss rules and the rate calculation.

1List every disposal in the tax year with its date. Note any exempt assets, gifts or connected-party sales.
2For each disposal, compute proceeds (or market value), then deduct incidental selling costs and the allowable cost. State each gain or loss.
3Add up the gains and the losses of the current year. Net them in full.
4If the net result is a gain, apply brought forward losses only to reduce it to £3,000. If it is a net loss, carry it forward in full.
5Deduct the annual exempt amount (£3,000) to find the taxable gain.
6Find the unused basic rate band (basic rate band less taxable income). Tax that part of the gain at 18% and the rest at 24%. Use 14% for any business asset disposal relief gain.
7State the reporting date and payment date. Check whether the 60-day rule for UK residential property applies.
8State any loss carried forward and any assumption you made.

Quickest way: Gain, net, protect the exempt amount, tax

When to use it: Use this when the question gives several disposals and asks for the CGT payable and the dates.

Write one line per disposal: proceeds − costs = gain or (loss).
Net the current year first. Then compare the result with £3,000.
If the result is above £3,000, use b/f losses only for the excess. If it is £3,000 or less, use none.
Calculate the 18% slice from the unused basic rate band. Everything above it is at 24%.
Write the dates last: 60 days from completion for residential property, otherwise 31 January.

Common mistakes in Computing Gains and Losses and Reporting Deadlines

Using brought forward losses to reduce the gain to nil.
Students treat b/f losses like current year losses.
Fix: Use b/f losses only to reduce the net gain to £3,000. Carry the rest forward.
Deducting the annual exempt amount before setting off current year losses.
The order is not memorised.
Fix: Current year losses go first, in full. Then b/f losses to the exempt amount, then the exempt amount.
Taxing the whole gain at 24%.
Students forget that gains use up the basic rate band left after taxable income.
Fix: Work out the unused basic rate band first. Tax that slice at 18%.
Missing the 60-day deadline for UK residential property.
Students give 31 January for every disposal.
Fix: Whenever the asset is UK residential property and tax is due, state 60 days from completion. The tax is paid on account.
Including repairs, or costs not reflected in the asset, as allowable costs.
Any spending on the asset seems allowable.
Fix: Allow only the cost, the incidental costs of buying and selling, and enhancement expenditure still reflected in the asset.
Using the sale price for a gift or a sale to a connected person.
Students ignore the connection or the gift.
Fix: Use market value as proceeds in both cases. Flag a connected-party loss as restricted.

Worked examples

Example 1

In 2025/26 Hannah sold shares for £48,000. She had paid £30,000 for them and the costs of sale were £1,000. She also sold land for £60,000, with selling costs of £2,000. The land cost £68,000. Hannah has losses brought forward of £9,000. Compute her taxable gain and the loss carried forward.

Show the solution

Shares: £48,000 − £1,000 − £30,000 = gain of £17,000.
Land: £60,000 − £2,000 − £68,000 = loss of £10,000.
Net the current year in full: £17,000 − £10,000 = net gain of £7,000.
Brought forward losses are used only to reduce the gain to £3,000: £7,000 − £3,000 = £4,000 used.
Net gain after losses = £3,000. Deduct the annual exempt amount of £3,000. Taxable gain = nil.
Loss carried forward: £9,000 − £4,000 = £5,000.

Answer: Hannah's taxable gain is nil, so no CGT is payable. Losses of £5,000 are carried forward.

Example 2

Raj sold a UK buy-to-let flat which was not his home. Completion was on 20 July 2025. Proceeds were £310,000. The flat cost £200,000, with legal fees on purchase of £4,000. He added an extension for £16,000. Selling costs were £6,000. He has no losses. His taxable income for 2025/26 is £22,000 and the basic rate band is £37,700. Compute the CGT and state the reporting and payment dates.

Show the solution

Allowable cost: £200,000 + £4,000 + £16,000 = £220,000.
Gain: £310,000 − £6,000 − £220,000 = £84,000.
Deduct the annual exempt amount: £84,000 − £3,000 = £81,000.
Unused basic rate band: £37,700 − £22,000 = £15,700.
CGT at 18%: £15,700 × 18% = £2,826.
CGT at 24%: (£81,000 − £15,700) = £65,300 × 24% = £15,672.
Total CGT: £2,826 + £15,672 = £18,498.
Dates: the flat is UK residential property and tax is due. The return and payment on account are due within 60 days of completion. 60 days from 20 July 2025 is 18 September 2025. The gain is also reported on the 2025/26 self-assessment return, due 31 January 2027, and the payment already made is credited against the liability.

Answer: CGT is £18,498. Report and pay it by 18 September 2025, then include it on the 2025/26 return.

Exam tips

Show a line for every disposal with proceeds, costs and result. Marks are given for each correct figure even if one figure is wrong.
Always state the order: current year losses, then b/f losses to the exempt amount, then the exempt amount. Say it in words as well as in figures.
Check the asset type. If it is UK residential property, mention the 60-day report and payment. In a written answer, say that the payment is on account.
Use the tax tables for the rates and the £3,000 exempt amount. Do not rely on memory. Take taxable income and the basic rate band from the question or the tables.
In a scenario, add a sentence of advice. For example, say whether a loss is wasted or a disposal in the next tax year would use a fresh exempt amount.

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

Computing Gains and Losses and Reporting Deadlines in other exams

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

Computing Gains and Losses and Reporting Deadlines: frequently asked questions

Can I choose not to use a capital loss in the current year?

No. Current year losses are set against current year gains in full, even if this wastes the annual exempt amount. Only brought forward losses are limited to the amount needed to reach the exempt amount.

Can capital losses be carried back?

Generally no. They are set against gains of the same year, then carried forward indefinitely against future gains. The exception is the year of death, where unused losses can be carried back.

When must I report and pay CGT on a UK residential property sale?

Within 60 days of completion, if there is tax to pay. The payment is on account of the full tax year's liability. The gain is still reported on the self-assessment return, with tax due by 31 January after the tax year.

What are the CGT rates for an individual in ATX?

For 2025/26 the tax tables give 18% and 24%. The 18% rate applies to gains that fall within the unused basic rate band. The annual exempt amount is £3,000. Business asset disposal relief gains are taxed at 14%.