Commentary

C1.106 Allowable capital losses

Capital gains tax
Capital gains tax | Commentary

C1.106 Allowable capital losses

Capital gains tax | Commentary

C1.106 Allowable capital losses

For a gain or loss to be within the scope of tax on chargeable gains, there must be a chargeable disposal of a chargeable asset by a chargeable person. See C1.104, C1.103 and C1.102 respectively.

Individuals, trustees and personal representatives are subject to capital gains tax on chargeable gains. Companies are subject to corporation tax on chargeable gains. See C1.102.

This article discusses relief for allowable losses. For the computation of chargeable gains and losses, see C1.105. For the rates of tax that apply to chargeable gains, see C1.107.

Allowable losses

Allowable losses are computed on the disposal of an asset in the same way as gains, unless there is express provision in the legislation to the contrary1. For example, the amount of the allowable loss is restricted where the asset qualified for capital allowances (see C2.217)2.

A loss is generally an allowable loss if a gain on the disposal would have been a chargeable gain (see C1.501)3. Therefore, subject to limited exceptions, losses arising in respect of exempt assets or exempt disposals are not allowable losses (see C1.103 and C1.104).

This also means that the territorial scope of the charge to tax on chargeable gains need to be considered4. For example, if the taxpayer is non-resident in the UK and had a chargeable gain arisen on the disposal this would not be taxable in their hands, then a loss on the disposal is not allowable. See C1.102 for the territorial scope of the charge to tax.

There is a targeted anti-avoidance

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