ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: the use of exemptions and reliefs in deferring and minimising tax liabilities
Priya, a UK resident higher rate taxpayer, sells a quoted share portfolio (not residential property) in the 2026/27 tax year and realises a chargeable gain of £23,000. She has no capital losses and has made 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?
Priya's capital gains tax is £4,800. After deducting the £3,000 annual exempt amount, her taxable gain is £20,000, and because she is a higher rate taxpayer the whole gain is taxed at the 24% higher rate.
- A£4,800Correct
- B£5,520
- C£4,080
- D£4,140
Explanation
The annual exempt amount is £3,000, so the taxable gain is £23,000 - £3,000 = £20,000. As a higher rate taxpayer, Priya pays 24% on the whole gain: £20,000 x 24% = £4,800. £5,520 is wrong because it taxes the gain without deducting the annual exempt amount. £4,080 would apply the 18% rate to the gain before the exemption.
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