ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: the use of exemptions and reliefs in deferring and minimising tax liabilities

In 2026/27 Hannah, a higher rate taxpayer, has a chargeable gain of £15,000 on shares and an allowable capital loss of £9,000 on a different asset, both arising in the same year. She also has unused capital losses of £5,000 brought forward from 2023/24. What is the most tax-efficient treatment of the losses and the resulting taxable gain?

Current year losses are set against gains first, giving £6,000. Brought forward losses are then used only to bring the gain down to the £3,000 annual exempt amount, so £3,000 is used and £2,000 is carried forward, with no tax payable.

1. ASet the current year loss of £9,000 against the gain, giving a gain of £6,000, then use only enough brought forward loss to reduce it to £3,000, leaving £2,000 of brought forward loss carried forwardCorrect
2. BSet the brought forward loss against the gain first, then the current year loss, leaving no taxable gain and wasting the annual exempt amount
3. CSet the current year loss and the brought forward loss in full against the gain, leaving a gain of £1,000 covered by the annual exempt amount
4. DCarry the current year loss forward and use the annual exempt amount against the gain, leaving £12,000 taxable