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ACCA Strategic Professional · Advanced Taxation (UK) · Alternative ways of achieving personal or business outcomes and their tax consequences

Marta sells a rental property (not her home) to her company, Marta Homes Ltd, for £500,000 consideration, giving a chargeable gain of £203,000 before the annual exempt amount. She has no other gains and her taxable income is £60,000. Using the tax table rates, what is her CGT, ignoring any reliefs?

Her CGT is £48,000. After deducting the £3,000 annual exempt amount, the gain is £200,000. Her taxable income of £60,000 takes her into the higher rate band, so the whole gain is taxed at 24%, giving £48,000.

  1. A£48,000Correct
  2. B£36,000
  3. C£48,720
  4. D£36,540

Explanation

Gain after annual exempt amount of £3,000 is £200,000. As Marta is a higher rate taxpayer, the 24% rate applies to the whole gain: £200,000 × 24% = £48,000. £36,000 wrongly uses 18%, and £48,720 forgets to deduct the annual exempt amount.

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