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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

In 2025/26, Tobias, a UK resident individual, made chargeable gains of £10,000 and an allowable current year capital loss of £2,000. He also has unused capital losses of £12,000 brought forward from 2023/24. What amount of brought forward loss will Tobias use in 2025/26?

Tobias uses £5,000 of the brought forward loss. After the £2,000 current year loss, his gain is £8,000, and brought forward losses are only used to reduce gains down to the £3,000 annual exempt amount. The other £7,000 of loss is carried forward.

  1. A£5,000Correct
  2. B£12,000
  3. C£7,000
  4. D£8,000

Explanation

The current year loss is first set against the gain: £10,000 - £2,000 = £8,000. Brought forward losses are used only to reduce gains to the annual exempt amount of £3,000, so £8,000 - £3,000 = £5,000 is used. The remaining £7,000 is carried forward. Using £8,000 ignores the preservation of the exempt amount.

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