Taxation of trusts—capital losses
Taxation of trusts—capital losses

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

  • Taxation of trusts—capital losses
  • Trustees' use of losses
  • Anti-avoidance

FORTHCOMING CHANGE: As originally announced at Autumn Budget 2017 and followed up by written statement after Spring Statement 2018, plus an announcement in Budget 2018, the government ran a consultation on the taxation of trusts from 7 November 2018 to 28 February 2019, inviting views on the principles of transparency, fairness and simplicity that it believes should underpin the taxation of trusts. See also the research exploring the use of trusts which was also published on 7 November 2018. See News Analysis: Exploring the consultation and review on the taxation of trusts.

Capital losses arising to trustees are calculated in the same way as they are for individuals (for further guidance on capital losses for individuals, see Practice Note: Utilising capital losses). Capital losses are automatically set against any gains of the same year of period of assessment; any that are unused can be carried forward and set against gains arising in subsequent years. They cannot be carried back and set against gains of a previous year.

Losses brought forward are only set against gains of subsequent years to the extent required to reduce the gains of that year to the amount of the applicable annual exemption. In this way none of the annual exemption is wasted.

Losses must be claimed in order to be allowable, normally on the Capital Gains supplementary pages