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ACCA Applied Skills · Taxation (UK) · The scope of the taxation of capital gains

In the tax year 2026/27, Priya, a higher rate taxpayer, sold a seaside flat (not her main residence) and made a chargeable gain of £23,000. She has no capital losses and no other disposals in the year. What is her capital gains tax liability using the rates and annual exempt amount given in the tax tables?

The liability is £4,800. The £3,000 annual exempt amount is deducted from the £23,000 gain, leaving £20,000 taxable. Because Priya is a higher rate taxpayer and the asset is a residential property, the gain is taxed at the 24% higher rate, giving £4,800.

  1. A£4,800Correct
  2. B£5,520
  3. C£4,140
  4. D£3,600

Explanation

Gain £23,000 less annual exempt amount £3,000 gives a taxable gain of £20,000. As a higher rate taxpayer, the gain is taxed at 24%, so tax is £20,000 × 24% = £4,800. The figure of £5,520 is wrong because it ignores the annual exempt amount (£23,000 × 24%). The figure of £3,600 wrongly uses the 18% rate on £20,000.

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