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ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax and trusts

Priya, a higher rate taxpayer, sold her unincorporated trading business in 2025/26 and made a gain of £300,000 that fully qualifies for business asset disposal relief. She has not claimed the relief before. In the same year she made a gain of £50,000 on the sale of a residential investment property. She has no capital losses and her annual exempt amount is unused. What is her total capital gains tax liability for 2025/26, assuming the annual exempt amount is used in the most beneficial way?

The total liability is £53,280. The BADR gain of £300,000 is taxed at 14%, giving £42,000. The £3,000 annual exempt amount is best used against the residential gain taxed at 24%, so £47,000 × 24% adds £11,280.

  1. A£53,580
  2. B£54,000
  3. C£50,460
  4. D£53,280Correct

Explanation

The annual exempt amount of £3,000 is set against the gain taxed at the highest rate, which is the residential property gain at 24%. Tax is £300,000 × 14% = £42,000 plus (£50,000 − £3,000) × 24% = £11,280, giving £53,280. £53,580 wrongly sets the exempt amount against the 14% gain, and £54,000 ignores it.

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