ACCA Applied Skills · Taxation (UK) · The basic principles of computing gains and losses
Tomas made chargeable gains of £16,000 and allowable losses of £5,000 in 2025/26. He has unused capital losses of £4,000 brought forward from 2023/24. The annual exempt amount is £3,000. What amount of losses is carried forward to 2026/27?
No losses are carried forward. Current year losses reduce gains to £11,000, and the £4,000 brought forward loss is fully used because gains remain well above the £3,000 annual exempt amount, leaving £4,000 taxable after the loss.
- A£0Correct
- B£4,000
- C£1,000
- D£5,000
Explanation
Current year losses are set off first: £16,000 - £5,000 = £11,000. Brought forward losses are then used only to reduce the gain to the annual exempt amount: £11,000 - £3,000 = £8,000 can be absorbed, so all £4,000 is used, leaving taxable gains of £4,000. The £4,000 option is wrong because it ignores that the gain exceeds the exempt amount.
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