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ACCA Strategic Professional · Advanced Taxation (UK) · Tax advantages and disadvantages of alternative courses of action

Mia, a higher rate taxpayer, sells a quoted investment portfolio in 2025/26 and realises a chargeable gain of £23,000. She has no losses and no other disposals in the year. Using the rates and annual exempt amount in the ATX-UK tax tables, what is her capital gains tax liability on the disposal?

The capital gains tax is £4,800. Deduct the £3,000 annual exempt amount from the £23,000 gain to leave £20,000, then tax it at the 24% higher rate. Using 18% or ignoring the annual exempt amount gives wrong figures.

  1. A£4,800Correct
  2. B£4,320
  3. C£4,560
  4. D£5,520

Explanation

The annual exempt amount is £3,000, so the taxable gain is £23,000 - £3,000 = £20,000. As Mia is a higher rate taxpayer, the 24% rate applies: £20,000 x 24% = £4,800. £4,320 wrongly uses 18% on the net gain, and £5,520 forgets the annual exempt amount (24% x £23,000).

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