Skip to content

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

Rahul sells his entire unincorporated trading business, which he has run for six years, and the gains qualify for Business Asset Disposal Relief (BADR). He has made no previous claims. Which statement correctly describes the relief available to him for the disposal under the rules in the ATX-UK tax tables (Finance Act 2025)?

BADR gives a 14% rate on qualifying gains up to a lifetime limit of £1,000,000. Gains above the limit are taxed at the normal CGT rates of 18% or 24%. The relief is not unlimited, and the older 10% rate and £10 million limit no longer apply.

  1. AQualifying gains up to a lifetime limit of £1,000,000 are taxed at 14%Correct
  2. BQualifying gains up to a lifetime limit of £10,000,000 are taxed at 10%
  3. CQualifying gains up to a lifetime limit of £1,000,000 are taxed at 18%
  4. DQualifying gains are taxed at 14% with no lifetime limit

Explanation

The ATX-UK tax tables give a lifetime limit of £1,000,000 for BADR and a rate of 14%. The £10m limit and 10% rate are older rules, and the 18% lower rate is the ordinary CGT rate, not the BADR rate. The relief is capped, so it does not apply without limit.

Did you get it right without looking?

One question tells you little. A timed set on Capital gains tax: the basic principles of computing gains and losses shows your real accuracy, how long you take and where you lose marks.

Practise Capital gains tax: the basic principles of computing gains and lossesFree diagnostic mock

More Capital gains tax: the basic principles of computing gains and losses questions