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ACCA Applied Skills · Taxation (UK) · The basic principles of computing gains and losses

Which of the following statements about the use of the annual exempt amount of £3,000 in 2025/26 is correct?

Unused annual exempt amount cannot be carried forward. It is available each tax year to an individual, is lost if not used, and cannot be transferred to a spouse. Current year losses are set off before it.

  1. AUnused annual exempt amount cannot be carried forward to later yearsCorrect
  2. BUnused annual exempt amount can be carried forward for up to three years
  3. CUnused annual exempt amount can be transferred to a spouse
  4. DCurrent year losses are not set off before the annual exempt amount is applied

Explanation

The annual exempt amount is a use-it-or-lose-it relief and cannot be carried forward or transferred. Current year losses are always deducted from current year gains first, before the annual exempt amount, so the last option is wrong.

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