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

Tom, a higher rate taxpayer with no unused basic rate band, made a single chargeable gain of £23,000 on shares and has no capital losses. He has no reliefs available. Using the annual exempt amount of £3,000, what is his CGT liability?

The CGT liability is £4,800. The £23,000 gain is reduced by the £3,000 annual exempt amount to £20,000, and because Tom has no basic rate band left, the whole taxable gain is charged at the 24% higher rate.

  1. A£4,800Correct
  2. B£4,320
  3. C£5,520
  4. D£3,600

Explanation

Taxable gain = £23,000 - £3,000 = £20,000. As he has no basic rate band left, the 24% higher rate applies: £20,000 x 24% = £4,800. £5,520 taxes the gain before the exempt amount. £4,320 wrongly uses 18%, and £3,600 is 18% of £20,000 less nothing relevant.

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