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ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: the basic principles of computing gains and losses

Mara sells her unincorporated trading business and the gain qualifies for Business Asset Disposal Relief (BADR). She has made no earlier claims for BADR. Which statement about the relief, as set out in the ATX-UK tax tables, is correct?

Business asset disposal relief taxes qualifying gains at 14%, up to a lifetime limit of £1,000,000 of gains. The 10% rate and the £10 million limit belong to earlier rules, and 18% is the ordinary lower CGT rate.

  1. AQualifying gains up to a lifetime limit of £1,000,000 are taxed at 14%Correct
  2. BQualifying gains up to a lifetime limit of £1,000,000 are taxed at 10%
  3. CQualifying gains up to a lifetime limit of £10,000,000 are taxed at 14%
  4. DQualifying gains are taxed at 18% up to a lifetime limit of £1,000,000

Explanation

The ATX-UK tax tables give a lifetime limit of £1,000,000 for business asset disposal relief and a rate of tax of 14%. The 10% rate and the £10,000,000 limit are former rules and no longer apply. The 18% rate is the lower main CGT rate, not the BADR rate.

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