Capital Gains Tax is a tax on profit from disposing of an asset that has increased in value. What is the annual tax-free allowance?

• A. £12,300
• B. £11,000
• C. £15,000
• D. £10,000

Answer: (A)

Capital Gains Tax is charged on the profit from disposing of assets, but there’s an annual amount you can realise each tax year without paying CGT. This is called the annual exempt amount. For the year in question, that allowance is £12,300, so gains up to that figure are free of CGT. If total gains (after accounting for losses) exceed £12,300, the excess is taxed at the applicable CGT rate. The allowance is per individual per year, and you can sometimes maximise it by planning with a spouse or civil partner, though unused allowance isn’t carried forward. That’s why £12,300 is the correct figure.