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ACCA Applied Skills · Taxation (UK) · The use of exemptions and reliefs in deferring and minimising tax liabilities arising on the disposal of capital assets

Hannah sold her entire unincorporated trading business on 15 January 2026 and the disposal qualifies for business asset disposal relief. She has made no earlier claims for the relief. Her only chargeable gain in 2025/26 is £200,000 on the business and she has no capital losses. Her taxable income is £60,000, so she is a higher rate taxpayer. Ignoring the annual exempt amount, what is the capital gains tax on this gain if relief is claimed?

The tax is £28,000. A gain qualifying for business asset disposal relief is taxed at 14% within the £1,000,000 lifetime limit, whatever her income level. £200,000 multiplied by 14% gives £28,000, rather than the 24% higher rate that would give £48,000.

  1. A£28,000Correct
  2. B£48,000
  3. C£34,000
  4. D£14,000

Explanation

Qualifying gains up to the £1,000,000 lifetime limit are taxed at 14%. So £200,000 x 14% = £28,000. The figure of £48,000 wrongly applies the 24% higher rate to the whole gain. £14,000 wrongly applies 14% to only £100,000.

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