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ACCA Strategic Professional · Advanced Taxation (UK) · Tax administration and the UK tax system

Daniel realises a chargeable gain of £20,000 in 2026/27 on shares which qualify for investors' relief. He has used £990,000 of his lifetime limit for investors' relief on earlier disposals. Which statement correctly states the tax treatment of the gain, ignoring the annual exempt amount?

Only £10,000 of Daniel's lifetime investors' relief limit of £1,000,000 remains, so £10,000 of the gain is taxed at 14%. The excess £10,000 is taxed at the normal capital gains tax rates of 18% or 24%.

  1. AThe whole gain is taxed at 14%
  2. B£10,000 is taxed at 14% and the remaining £10,000 is taxed at the normal capital gains tax rateCorrect
  3. CThe whole gain is taxed at 24% because the limit is nearly used
  4. DThe whole gain is taxed at 14% because the limit applies to the number of disposals

Explanation

Investors' relief has a lifetime limit of £1,000,000, so only £10,000 remains available. That £10,000 is taxed at 14%. The remaining £10,000 of gain exceeds the limit and is taxed at the normal rates of 18% or 24%, depending on the taxpayer's income.

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