The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
If an individual sells a chargeable asset and makes an allowable loss, how can this be relieved?
First of all, since the simplification of capital gains tax from 6 April 2008, the proforma to calculate a loss is the same as the proforma to calculate a gain. See the Basic calculation principles of capital gains tax guidance note for more details. Broadly, a loss arises if net proceeds after incidental costs of sale are less than the total of the acquisition costs plus any allowable enhancement expenditure.
Usually, allowable capital losses are set against chargeable gains, reducing the amount of the gain.
However, where a loss has been made on unquoted shares, the loss may be able to be set against income instead of gains. This is usually a more tax efficient use of the loss, as income is taxed at higher rates than capital gains. See the Losses on shares set against income guidance note for details of the conditions which must be met.
Also, certain unused trading, post-cessation trading or employment income tax losses can be converted into capital losses in order to be set against the individual’s capital gains. The converted loss is regarded as a capital loss for the same tax year as the income tax loss arose, and takes priority over capital losses brought forward from earlier years. For details of the conditions that must be met and the amount of the loss that can be converted, see the Sole trader losses ― established trades and Post-cessation receipts and expenses of a trade guidance notes and Simon’s Taxes E4.789A.
In setting off capital losses, the following general rules apply (discussed in detail below):
all capital losses must be claimed
capital losses must first be set off against capital gains in the same tax year (deducted in the most tax efficient way)
after reducing the current year gains to nil, the excess is carried forward to set against gains in
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
What is quick succession relief?Quick succession relief (QSR) reduces the tax payable when the same property has been subject to more than one charge to IHT. It applies where there have been two chargeable transfers on which tax is payable within a period of five years.Although commonly called QSR,
Once a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the taxpayer.CorrectionHMRC has the right to amend the tax
Taxpayers may wish to consider basic tax planning arrangements in use the capital gains tax annual exemption. This type of tax planning is often reviewed at the end of the tax year.This guidance note first looks at the annual exemption in detail and then various tax planning strategies that might be
IntroductionA pension scheme that is not a registered scheme is known as an EFRBS. Since April 6 2006, the distinction between what were approved and unapproved pension schemes has been replaced with a distinction between registered and unregistered schemes.The position as it applies with effect