Capital Gains Tax for the SQE

Capital Gains Tax questions on SQE1 reward method. This free PDF sets out who pays and on what, a decision tree for whether a gain is chargeable, a five-step method for the computation, losses and the annual exempt amount, the 2026 to 2027 rates, the business reliefs, private residence relief and the rules on death, with three fully worked examples.

Updated October 2026 · checked against the SQE1 specification, the Taxation of Chargeable Gains Act 1992 and the Finance Acts on legislation.gov.uk, GOV.UK and HMRC guidance on 21 October 2026. General information, not tax or legal advice.

Where Capital Gains Tax sits in SQE1

The SRA examines taxation only inside three subjects, and Capital Gains Tax appears in all of them. Business Law and Practice (FLK1) covers sole traders, partners and shareholders: the calculation of gains, allowable deductions, the main reliefs and exemptions, calculation and collection, and the scope of the anti-avoidance rules. Property Law and Practice (FLK2) covers the basis of charge and private residence relief. Wills and the Administration of Estates (FLK2) covers the personal representatives’ liability during the administration and the beneficiaries’ liability on inherited assets. The law examined is the law four calendar months before the window opens, so both 2027 sittings use the 2026 to 2027 tax year.

The figures at a glance

The order is the method

Most wrong options use the right rule in the wrong order. Work out the gain on each disposal first, then deduct this year’s losses in full, then losses brought forward only as far as needed to bring the gains down to the £3,000 annual exempt amount. Deduct the allowance, add what is left on top of taxable income, and charge the part within the basic rate band at 18% and the rest at 24%.

New law older materials miss

• Main rates: 18% and 24% for disposals from 30 October 2024, with no separate rate for residential property. Options at 10%, 20% or 28% use older law.
• Business Asset Disposal Relief: 18% from 6 April 2026, up from 14%.
• Incorporation relief: for transfers from 6 April 2026 it applies only on a claim, and the election to opt out has gone.
• Letting relief: since 6 April 2020 only where the owner lives in the home with the tenant, capped at £40,000.

What is inside the PDF

• How Capital Gains Tax is examined, and every figure on one page
• A decision tree for whether there is a chargeable gain
• The computation in five steps: costs, chattels, losses, the allowance and the rates
• Business Asset Disposal Relief, holdover, rollover and incorporation relief, worked
• Private residence relief, deemed occupation and letting relief
• Death, personal representatives and beneficiaries
• Reporting and paying, and how companies differ
• Three worked examples, ten exam traps, twelve self-test questions and a checklist

For the rest of the tax syllabus, see our free guide to calculating Income Tax, and plan your revision with the SQE1 Specification Checklist.

Frequently asked questions