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HMRC internal manual

Capital Gains Manual

Losses: deduction of trading losses


  • Section 261B TCGA92 (and previously FA91/S72) extends relief for losses incurred by a person in carrying on a trade, profession, vocation or employment to include a set-off against chargeable gains as an allowable CGT loss.

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

  • the amount of the loss claimed against general income which cannot be deducted in calculating the person’s net income for the year. (See Sections 71 and 130 ITA07)


  • the net amount of the person’s chargeable gains for the year disregarding the annual exempt amount. For losses arising in the years 2004-05 to 2007-08 taper relief is also disregarded whilst for losses arising in 2002-03 and 2003-04 an election may be made within the claim time limit to disregard taper relief. See Section 261C.

For further guidance, including the effect of an event leading to a reduction of the amount chargeable to Capital Gains Tax occurring after the deemed allowable loss has become final, see BIM75420 onwards.

The relief applies to losses for the year of assessment 1991-92 and subsequent years.