Utilising Capital Gains Tax losses
21/09/2023

Usually, if you sell an asset for less than you paid for it you would make a capital loss. As a general rule, if the asset would have been liable to CGT had a gain taken place, then the loss should be an allowable deduction. 

The exact treatment of losses depends on whether they are:

  • losses of the same year of assessment as the gains;
  • losses of earlier years of assessment;
  • losses of the tax year of death; or
  • particular losses which may, exceptionally, be carried back from a later year of assessment.

These deduction of an allowable loss from chargeable gains does not require a claim and does not extend the time limit for enquiring into the original loss claim. Gains accruing in a tax year may be chargeable to CGT at different rates. Therefore, the tax effect of losses and the annual exempt amount set off against those gains can vary.

In most circumstances, allowable losses and the annual exempt amount can be deducted in the way that is most beneficial to the individual. This will usually be against gains that are charged at the highest rate. A claim for losses does not have to be made straight away and can be made up to 4 years after the end of the tax year that the relevant asset was disposed.

Where there remain unused losses that cannot be set against gains of the same year, these losses are carried forward to be set against future gains. It is only possible to utilise losses brought forward if net gains exceed the annual CGT exempt amount for the year.


About us  

Our director-led service is supported by the expertise of our highly skilled staff. We believe that our reputation for technical excellence is one of the main reasons for the company’s continued growth. 

Since the 1960’s we have been looking after the financial needs of our diverse database of clients. The practice of today evolved from two long-established firms originating in Coventry (Luckmans) and Kenilworth (Duckett Parker) merging in 2000.

Our vision in 2000 was to combine the directors' expertise to the greatest advantage for you – our client. That ethos still holds true and has enabled us to build a relationship with our clients that lasts.

Legal

Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

Contact us

LDP Luckmans
1110 Elliott Court, Coventry Business Park
Herald Avenue
Coventry
CV5 6UB

+44 (0) 24 7662 7200
partners@luckmans.com
JUMP TO TOP