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ACCA Strategic Professional · Advanced Taxation (UK) · Taxes applicable to a given situation or course of action and their impact

Cressida, a higher rate taxpayer, makes a taxable gain of £53,000 on shares that do not qualify for any relief, before her annual exempt amount. She has no other gains or losses. Using the CGT rates in the ATX-UK tax rates and allowances, what is her CGT liability?

Her CGT is £12,000. The gain of £53,000 is reduced by the £3,000 annual exempt amount to £50,000, which is taxed at the higher rate of 24%. Ignoring the exempt amount would wrongly give £12,720.

  1. A£12,000Correct
  2. B£12,720
  3. C£9,000
  4. D£50,000

Explanation

Gain £53,000 less annual exempt amount £3,000 = £50,000. Higher rate taxpayer pays 24%: £50,000 x 24% = £12,000. £12,720 results from forgetting the annual exempt amount (£53,000 x 24%).

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