Bob has already used up half of his 2020 annual capital gains tax exemption, but has realised a new chargeable gain of €10,000. What capital gains tax liability therefore applies in respect of this gain, assuming he makes no other asset disposals in 2020?

• A. €2,880.90
• B. €3,090.45
• C. €3,371.40
• D. €3,600.00

Answer: (B)

The key idea here is to apply the annual CGT exempt amount first, then tax the remaining gain at the standard CGT rate. In 2020 the annual exemption for an individual is €1,270. Bob has used up half of it, so the remaining exemption is €635. Subtract that from the new gain: €10,000 − €635 = €9,365 becomes the chargeable gain. The CGT rate for individuals in 2020 is 33%, so the tax due is €9,365 × 0.33 = €3,090.45.

So the capital gains tax liability on this gain is €3,090.45.