ACCA Taxation (F6) Practice Exam

What is the annual exempt amount for capital gains tax as mentioned in typical assessments?

1. £10,000

2. £12,300

3. £5,000

4. £15,000

The correct answer is: £12,300

The annual exempt amount for capital gains tax, as reflected in typical assessments, is indeed £12,300. This exemption allows individuals to make a certain level of gains each tax year without incurring any capital gains tax liability. Understanding the significance of this limit is crucial for individuals engaged in buying and selling assets such as shares, property, or other investments. By providing an exempt amount, the tax system ensures that smaller gains are not taxed, simplifying the process for taxpayers and preventing the tax burden from impacting typical investment activities. Knowing this exemption helps taxpayers in planning their transactions strategically, as any gains above this threshold are subject to tax at the applicable rates for capital gains, which can vary based on one's income level and the nature of the asset sold.