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ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: the basic principles of computing gains and losses

Priya made a chargeable gain of £20,000 in 2025/26 and had a current year capital loss of £4,000. She also has capital losses brought forward from earlier years of £30,000. The annual exempt amount is £3,000. What amount of brought forward losses will Priya use in 2025/26, and what amount is carried forward?

Priya uses £13,000 of brought forward losses and carries forward £17,000. Current year losses are offset first, leaving £16,000. Brought forward losses are then used only to reduce gains down to the annual exempt amount of £3,000, so the exempt amount is not wasted.

  1. AUsed £13,000; carried forward £17,000Correct
  2. BUsed £16,000; carried forward £14,000
  3. CUsed £0; carried forward £30,000
  4. DUsed £17,000; carried forward £13,000

Explanation

The current year loss is set off first: £20,000 - £4,000 = £16,000. Brought forward losses are used only to reduce the gain to the annual exempt amount, so £16,000 - £3,000 = £13,000 is used. The carry forward is £30,000 - £13,000 = £17,000. Using £16,000 wrongly wastes the annual exempt amount.

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