Taxation of Chargeable Gains Act 1992 section 1I

Income taxed at higher rates or gains exceeding unused basic rate band

Section 1I determines the rate of capital gains tax that applies to an individual's gains depending on whether their income is taxed at a higher income tax rate and whether their gains exceed the unused part of their basic rate band.

• If any of an individual's income is taxed at a higher income tax rate, all their chargeable gains (other than carried interest gains) are taxed at 24%.
• If none of the individual's income is taxed at a higher rate but their chargeable gains exceed the unused basic rate band, the excess (the "higher rate excess") is taxed at 24%, while gains within the unused band are taxed at 18%.
• Where entrepreneur or investor gains (taxed at 14% under business asset disposal relief or investors' relief) form part of the chargeable amount, they take priority in absorbing the unused basic rate band before other gains.
• Any remaining unused basic rate band after entrepreneur or investor gains can be allocated by the individual to carried interest gains or other gains, which are then taxed at 18%; unallocated gains are taxed at 24% (or 28% for carried interest gains).