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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 the tax year 2025/26, Priya, an individual, made a chargeable gain of £9,000 and an allowable capital loss of £2,000 on separate disposals. She has no brought forward losses. What is the amount of her gain that is liable to capital gains tax after the annual exempt amount (AEA)?

The taxable gain is £4,000. Current year capital losses are set against current year gains in full, giving a net gain of £7,000. The annual exempt amount of £3,000 is then deducted, leaving £4,000 chargeable to capital gains tax.

  1. A£4,000Correct
  2. B£6,000
  3. C£7,000
  4. D£0

Explanation

Current year losses must be set against current year gains in full. Net gain = £9,000 - £2,000 = £7,000. Deduct the AEA of £3,000 to leave £4,000 taxable. The option of £6,000 wrongly deducts the AEA first and then the loss would be limited, or deducts the loss and AEA inconsistently; £7,000 ignores the AEA.

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