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ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: the scope of the taxation of capital gains

Priya sells her entire unincorporated trading business, which she has run for six years, and the whole gain qualifies for Business Asset Disposal Relief (BADR). She has made no earlier claims for the relief. Under the rates and allowances for the exam, what rate applies to qualifying gains up to the lifetime limit, and what is that limit?

Qualifying gains are taxed at 14% up to a lifetime limit of £1,000,000 for Business Asset Disposal Relief. The tax tables state one 14% rate for both BADR and investors' relief, and each relief has its own £1,000,000 limit. Other figures are outdated or are the main CGT rates.

  1. A10% on gains up to £1,000,000
  2. B14% on gains up to £1,000,000Correct
  3. C18% on gains up to £1,000,000
  4. D14% on gains up to £10,000,000

Explanation

The tax tables give a single rate of 14% for business asset disposal relief and investors' relief, with a lifetime limit of £1,000,000 for each relief. 10% is the old rate and does not appear in the tables. 18% is the lower main CGT rate and is not the BADR rate. £10,000,000 is the former limit.

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