Capital losses
Capital losses

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Capital losses
  • Special rules restricting the use of losses
  • Assets that are lost, destroyed or become of negligible value
  • Non-residents
  • Anti-avoidance
  • Using capital losses

FORTHCOMING CHANGE relating to a corporate capital loss restriction: Finance Bill 2019–20 will introduce a corporate capital loss restriction (CCLR), limiting companies’ use of carried-forward capital losses to 50% of their capital gains arising in an accounting period. Companies will have an allowance permitting them unrestricted use of up to £5m of capital or income losses per year. The CCLR will also apply to pre-entry capital losses in the limited situations in which these losses may be set off against capital gains. The CCLR will be incorporated within the existing rules imposing a corporate income loss restriction (see Practice Note: Corporation tax loss relief for carried-forward losses) and will apply to gains accruing on or after 1 April 2020, with anti-forestalling measures applying since 29 October 2018. For more information, see News Analysis: Budget 2018—corporate capital loss restriction.

A capital gain that would otherwise result in a charge to tax may be reduced or eliminated if the taxpayer has made capital losses and is able to set these against the gain. For set-off to be permitted, a loss must be an allowable loss.

In this Practice Note, CGT is used to refer both to capital gains tax and to corporation tax on chargeable gains.

Generally, if selling an asset for a gain would result in CGT, then selling that same asset for a