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

Priya, a higher rate taxpayer, sold a quoted share portfolio (not qualifying for any relief) in 2025/26 and made a gain of £23,000 before the annual exempt amount. She has no capital losses. What is her CGT liability?

The CGT is £4,800. The £3,000 annual exempt amount reduces the £23,000 gain to £20,000, and because Priya is a higher rate taxpayer the whole taxable gain is charged at 24%. Ignoring the exempt amount would overstate the tax.

  1. A£4,800Correct
  2. B£5,520
  3. C£4,320
  4. D£3,600

Explanation

Gain £23,000 less annual exempt amount £3,000 = £20,000. As she is a higher rate taxpayer with no basic rate band left, the 24% rate applies: £20,000 x 24% = £4,800. Taxing the full gain at 24% gives £5,520, which wrongly ignores the exempt amount.

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