Using capital losses

Where capital gains tax would be payable on a gain made on the disposal of an asset, if the disposal results in a loss, the loss is an allowable loss for capital gains tax purposes.

Gains in the same tax year

In the event that capital gains are made in the same tax year as an allowable loss, the loss is first set against those gains. This may mean that the annual exempt amount is lost as this is set against net gains for the tax year (chargeable gains less allowable losses).

Carry forward unused losses

If there are no gains in the tax year, or allowable losses exceed chargeable gains, the unused losses can be carried forward to a future tax year.

There is no requirement to use them against the first available chargeable gains; rather you can choose when to use them. And unlike the set-off against gains of the same year, they can be set against net gains to the extent that they exceed the annual exempt amount, so that this is not wasted. Any losses remaining unused can be carried forward to a future tax year.

Report the loss

Remember to report capital losses to HMRC. This can be done on your tax return, or by writing to HMRC if you do not need to complete a tax return. You have four years from the end of the tax year in which to claim your losses. We can help you plan your disposals in a tax-efficient manner.