ACCA Applied Skills · Taxation (UK) · The computation of capital gains tax
In 2025/26 Yusuf, a higher rate taxpayer, made chargeable gains of £16,000 and allowable capital losses of £7,000 on separate disposals of quoted shares. He also has capital losses of £5,000 brought forward from earlier years. What is his capital gains tax liability for 2025/26?
Yusuf's liability is £240. Current-year losses reduce the gains to £9,000, brought forward losses of £5,000 reduce this to £4,000, and after the £3,000 annual exempt amount £1,000 is taxed at 24%.
- A£0
- B£240Correct
- C£1,200
- D£720
Explanation
Current-year losses are deducted first and in full: £16,000 - £7,000 = £9,000. Brought forward losses are used only to reduce the gain to the £3,000 annual exempt amount, so £6,000 is needed but only £5,000 is available, so all £5,000 is used. The taxable gain is £9,000 - £5,000 = £4,000, less... the exempt amount is then deducted, giving £1,000 taxable. Tax at 24% is £240.
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