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ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: gains and losses on the disposal of shares and securities

Priya has taxable income of £30,000 after the personal allowance in 2026/27. The basic rate band is £37,700. She makes a gain of £20,000 on shares that does not qualify for any relief, and a separate gain of £10,000 on the sale of her sole trader business that qualifies for business asset disposal relief. She has no losses and no earlier claims. How should she best use the annual exempt amount?

She should set the £3,000 annual exempt amount against the share gain. That gain bears tax at 18% or 24%, whereas the business asset disposal relief gain bears only 14%, so using it on the share gain saves the most tax.

  1. ASet it against the share gain, as this is taxed at higher rates than 14%Correct
  2. BSet it against the business gain, as this is taxed at 14%
  3. CApply it pro rata between the two gains
  4. DSet it against the business gain, because relief gains must always use it first

Explanation

The annual exempt amount can be allocated to maximise tax saved. The share gain of £20,000 is taxed at 18% on the part within the remaining basic rate band, and 24% above. The business gain is taxed at 14%, so the exempt amount saves more tax against the share gain, which gives the greatest saving. There is no pro rata requirement and no rule that relief gains use it first.

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