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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Post-cessation receipts and expenses: post-cessation expenses set against chargeable gains

S261D, S261E Taxation of Chargeable Gains Act 1992 (TCGA 1992)

Any excess post-cessation expenses remaining after making a claim to set them against total income may be set against the chargeable gains arising in the tax year

This guidance relates to post-cessation expenses incurred by individuals, trustees, personal representatives and non-resident companies subject to Income Tax only.

As discussed in BIM90090, there are a number of ways by which post-cessation expenses can be relieved. However, post-cessation expenses must first be set against post-cessation receipts arising in the same period from the same trade before considering any other method of relief (see BIM90095).

If there are no post-cessation receipts in the period, or the post-cessation expenses exceed the receipts, relief against total income of the person who incurred the expense may be available (see BIM90100). If there is no income in the tax year, or the post-cessation expenses exceed the total income, the excess can be treated as a loss and set against any chargeable gains arising in the tax year.


To make a claim for relief against capital gains arising in the year, either:

  • a claim for Income Tax relief under S96 Income Tax Act 2007 must have been made already in relation to the tax year, or
  • there is no income in the tax year meaning it is not possible for such a claim to be made.

This means that all the conditions which apply to the Income Tax relief also apply if the post-cessation expenses are to be set against capital gains (eg the post-cessation expense must arise due to a qualifying payment or a qualifying event and the targeted anti-avoidance rule applies etc). For guidance on the Income Tax relief claim, see BIM90100.

Method of relief

The amount treated as an allowable capital loss is limited to the lower of:

  • the amount which cannot be deducted from the person’s total income for the year (i.e. the amount by which the post-cessation expenses exceed the total income),
  • the net amount of the person’s chargeable gains for the year (disregarding the annual exempt amount, losses brought forward, and relief under S261B TCGA 1992).

This limitation ensures that excess post-cessation expenditure cannot be converted into a capital loss to carry forward.

For an example, see CG15804.

Time limit for claim

The claim must be made by the first anniversary of the normal self-assessment filing date for the tax year for which the loss is deducted. The self-assessment filing date depends on the date the return was issued. For most taxpayers, the filing deadline will be 31 January following the end of the tax year.

This means that, for example, if the loss were to be deducted against chargeable gains in the 2012/13 tax year, the claim must be made by 31 January 2015.

Post-cessation expenses exceed total income

If the post-cessation expenses exceed the chargeable gains, or there are no chargeable gains in the tax year, the unrelieved post-cessation expenses can only be carried forward to be set against future post-cessation receipts from the same trade (see BIM90135).