R0 Exam Prep

R03 CGT and IHT computations: free practice questions

5 free questions on CGT and IHT computations, part of learning outcome 4 (Tax and investment advice). Pick an answer to check it, or open the answer to see why each option is right or wrong.

  1. Question 1 of 5

    Ama, a higher-rate taxpayer, bought shares for £18,000 (paying £300 in costs) and sold them for £40,000 (paying £400 in costs). She has no other gains. What is her CGT for 2026/27?

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    The answer is D: £4,392

    Gain = £40,000 − £18,000 − £300 − £400 = £21,300. Less £3,000 = £18,300 × 24% = £4,392.

    Why the other options are wrong

    A
    Buying and selling costs are deductible.
    B
    The £3,000 annual exempt amount is deducted first.
    C
    As a higher-rate taxpayer, her gain is taxed at 24%, not 18%.

  2. Question 2 of 5

    Gail's pool holds 2,000 shares costing £8,000. On the day she sells 1,500 shares for £9,600, she also buys 500 for £3,000. What is her total gain?

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    The answer is C: £2,600

    Same-day 500: proceeds £3,200 − cost £3,000 = £200. Pool 1,000: proceeds £6,400 − cost £4,000 = £2,400. Total £2,600.

    Why the other options are wrong

    A
    The other 1,000 shares are matched with the pool.
    B
    The same-day shares also give a gain of £200.
    D
    500 of the shares sold are matched with the same-day purchase first.

  3. Question 3 of 5

    Leo gives his son unquoted trading company shares worth £90,000 that cost him £25,000, and they claim holdover relief. What will the son's base cost be?

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    The answer is A: £25,000

    Held-over gain = £90,000 − £25,000 = £65,000. Son's base cost = £90,000 − £65,000 = £25,000.

    Why the other options are wrong

    B
    His base cost is market value less the held-over gain.
    C
    That's the held-over gain.
    D
    The held-over gain of £65,000 reduces his base cost.

  4. Question 4 of 5

    Rosa makes the same £360,000 gift into trust (£354,000 after exemptions) but pays the IHT herself. How much IHT is due?

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    The answer is B: £7,250

    Grossing up: tax = £29,000 × 25% (i.e. ÷ 4) = £7,250, making a gross chargeable transfer of £361,250.

    Why the other options are wrong

    A
    Annual exemptions reduce the transfer before grossing up.
    C
    Lifetime tax is at 20%, grossed up, not at 40%.
    D
    When the settlor pays, the transfer must be grossed up.

  5. Question 5 of 5

    Six complete quarters after its tenth anniversary, a trust distributes £100,000. The effective rate at the last anniversary was 2%. What is the exit charge?

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    The answer is C: £300

    Exit charge = £100,000 × 2% × 6/40 = £300.

    Why the other options are wrong

    A
    The fraction is 6/40, not 6/8.
    B
    The rate is scaled by 6/40 for the quarters since the anniversary.
    D
    The effective rate is 2%, scaled by 6/40.

Practise all 32 CGT and IHT computations questions

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