CG21500 - Individuals: Losses: assessment
Source: gov.uk (2025-11-11)


Introduction (#introduction)

Relief for Losses (#relief-for-losses)

Unused allowable losses (#unused-allowable-losses)

Special rules for losses arising before 1996-1997 (#special-rules-for-losses-arising-before-1996-1997)

Losses accruing are usually not allowable, and hence may not be deducted from chargeable gains, unless they have been claimed in a quantified amount, see CG15800 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15800).

TCGA92/S16(2A) states a capital loss will be allowable only if it is notified within the normal time limit for claims see Section 43(1) TMA70. Exceptionally, a loss may be allowable if it is the subject of a competent claim, such as relief for loans to traders (TCGA92/s253), where by virtue of that claim the loss is specified to be an allowable loss.

There is no specific claim form. In practise, the notice may be the inclusion of details of the loss within an individual’s personal return and the supporting computations of gains and losses.

The 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. Special rules apply where the loss arose before 1996-1997.

The 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 (see CG30430 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg30430)), or
- particular losses which may, exceptionally, be carried back from a later year of assessment, see .
You deduct from the total amount of chargeable gains in the year of assessment

allowable losses accruing in that year of assessment, even if the net chargeable gains thus fall below the annual exempt amount;

then

unused allowable losses brought forward from earlier years (see CG15800) but not so as to take the net chargeable gains below the annual exempt amount;

then

particular losses carried back from a later year of assessment (see CG15800) but not so as to take the net chargeable gains below the annual exempt amount.

Capital Gains Tax is then charged on the excess of the net chargeable gains over the annual exempt amount, see CG18000C (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg18000c).

Gains accruing to a person in a tax year may be chargeable to capital gains tax at different rates. Thus the tax effect of losses and the annual exempt amount set off against those gains can vary.

Subject to specific restrictions that may apply on the use of particular losses (see CG15800), allowable losses and the annual exempt amount can be deducted in the way that is most beneficial to the individual TCGA92/S1F. Generally this will be against gains that are charged at the highest rate.

The combination of specific rules applying to specific losses and allocating losses in the most beneficial way will require careful record keeping.

Examples are at CG21520 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg21520).

Allowable losses which cannot be set against gains of the same year of assessment are carried forward and set against gains which arise in the future.

You utilise losses brought forward only if net gains (that is, total gains less total losses of the year) exceed the annual exempt amount for the year. Any losses brought forward which are not utilised are carried forward and set against future gains.

If the net gains are greater than the annual exempt amount, the amount of losses brought forward you use is the smaller of
- the total losses brought forward
- the total necessary to reduce the net gains to the level of the annual exempt amount. Any excess is carried forward.
You then deduct the annual exempt amount from the remaining net gains to give the amount chargeable to Capital Gains Tax.

For years before the introduction of Self Assessment there was no statutory mechanism for agreeing or litigating the amount of capital losses in the absence of gains for them to be set against, except for cases falling within TCGA92/S253, see CG15830 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15830) and CG65900 (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65900)+. A taxpayer cannot have the quantum of a loss brought before the First tier Tribunal until such time as a gain arises against which the loss can be set. This statutory position was endorsed in the tax case Tod v South Essex Motors (Basildon) Ltd 60TC598.

Where unused losses are brought forward and set against chargeable gains in a later year, losses incurred in 1996-97 and later years must be used before losses incurred in 1995-96 or earlier years.