Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Taxes applicable to a given situation or course of action and their impact

Priya is a higher rate taxpayer who will sell a business asset in 2025/26 and has not used any of her capital gains tax annual exempt amount. Her only gain is £53,000 and the asset does not qualify for business asset disposal relief. Using the rates in the examinable tax tables, what is the capital gains tax liability?

The liability is £12,000. The £3,000 annual exempt amount reduces the £53,000 gain to £50,000, and a higher rate taxpayer pays capital gains tax at 24% on it. Using 18% or ignoring the exempt amount produces the wrong figures.

  1. A£12,000Correct
  2. B£12,720
  3. C£9,540
  4. D£11,900

Explanation

Taxable gain is £53,000 less the £3,000 annual exempt amount, which is £50,000. As a higher rate taxpayer she pays 24%, giving £12,000. £12,720 taxes the gain without deducting the annual exempt amount. £9,540 uses the 18% rate on £53,000.

Did you get it right without looking?

One question tells you little. A timed set on Taxes applicable to a given situation or course of action and their impact shows your real accuracy, how long you take and where you lose marks.

Practise Taxes applicable to a given situation or course of action and their impactFree diagnostic mock

More Taxes applicable to a given situation or course of action and their impact questions