Section 1I Income taxed at higher rates or gains exceeding unused basic rate bandF1

F2(A1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1)

If any of an individual's income for a tax year is chargeable to income tax at a higher income tax rate, gains accruing to the individual in the tax year are F3charged at the rate of 24%.

(2)

If—

(a)

none of an individual's income for a tax year is chargeable to income tax at a higher income tax rate, but

(b)

the individual is chargeable to capital gains tax for the tax year on an amount that exceeds the unused part of the individual's basic rate band,

the excess (“the higher rate excess”) F4is charged at the rate of 24%.

(3)

The remainder of this section sets out special rules which apply depending on the nature of the gains within subsection (2)(b).

(4)

If—

(a)

the gains consist of or include gains (“entrepreneur or investor gains”) chargeable at the rate of F518% under section 169N(3) or 169VC(2), and

(b)

the total amount of the entrepreneur or investor gains exceeds the unused part of the individual's basic rate band,

that unused part is used fully against those gains.

(5)

The effect of so doing is that other gains comprised in the higher rate excess F6are then charged at the rate of 24%.

(6)

If the total amount of the entrepreneur or investor gains does not exceed the unused part of the individual's basic rate band—

(a)

so much of that unused part as is equal to that total amount is used against those gains, and

(b)

accordingly, the higher rate excess consists only of gains other than entrepreneur or investor gains.

(F77)

The individual may allocate so much of the unused part of the individual’s basic rate band F8as then remains to gains other than entrepreneur or investor gains.

(8)

The effect of the allocation is that the gains to which the allocation is made are charged at the rate of 18%.

(9)

Any gains to which no allocation is made are F9charged at the rate of 24%.

Annotations

Textual amendments

F1: Pt. 1 substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 2
F2: S. 1I(A1) omitted (for the tax year 2026-27 and subsequent tax years (but in relation to investment management services whenever performed)) by virtue of Finance Act 2026 (c. 11), s. 58(6), Sch. 11 para. 2(3)
F3: Words in s. 1I(1) substituted (with effect in accordance with s. 12(3) of the amending Act) by Finance Act 2025 (c. 8), s. 12(2)(b)(3)
F4: Words in s. 1I(2) substituted (with effect in accordance with s. 12(3) of the amending Act) by Finance Act 2025 (c. 8), s. 12(2)(c)(3)
F5: Word in s. 1I(4)(a) substituted (with effect in accordance with s. 9(8) of the amending Act) by Finance Act 2025 (c. 8), s. 9(7)(8) (with Sch. 2 Pt. 3)
F6: Words in s. 1I(5) substituted (with effect in accordance with s. 12(3) of the amending Act) by Finance Act 2025 (c. 8), s. 12(2)(d)(3)
F7: S. 1I(7)-(9) substituted (with effect in relation to disposals made on or after 30.10.2024) by Finance Act 2025 (c. 8), s. 7(3), Sch. 1 para. 2(d) (with Sch. 2 Pts. 1, 2)
F8: Words in s. 1I(7) substituted (with effect in accordance with s. 12(3) of the amending Act) by Finance Act 2025 (c. 8), s. 12(2)(e)(3)
F9: Words in s. 1I(9) substituted (with effect in accordance with s. 12(3) of the amending Act) by Finance Act 2025 (c. 8), s. 12(2)(f)(3)