ACCA Applied Skills · Taxation (UK) · Gains and losses on the disposal of movable and immovable property
Kofi, a higher rate taxpayer, made a gain of £50,000 on shares that qualifies for investors' relief and has no other gains. He has used none of his lifetime limit and the annual exempt amount is available. What is his capital gains tax liability?
The liability is £6,580. The £50,000 gain qualifies for investors' relief at 14%, and after deducting the £3,000 annual exempt amount the taxable gain is £47,000, which gives £6,580. Using the full gain gives £7,000, which is wrong.
- A£6,580Correct
- B£7,000
- C£12,000
- D£11,280
Explanation
Investors' relief gives a 14% rate. Deduct the £3,000 annual exempt amount: £50,000 - £3,000 = £47,000. Then £47,000 x 14% = £6,580. Option B ignores the exempt amount. Option C applies 24% to the whole gain and ignores both the relief and the exempt amount.
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