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HMRC internal manual

Capital Gains Manual

Losses: deduction of post-cessation expenditure


Section 261D TCGA92 (and previously FA95/S90 (4)) allows certain post-cessation expenditure, see BIM80715 onwards, which cannot be set off against income to be treated as an allowable CGT loss. This treatment must be claimed by the taxpayer.

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

  • the amount claimed for post-cessation trade or property relief which cannot be deducted in computing the taxpayer’s net income for the year. (See Sections 101 and 126 ITA07)


  • the net amount of the taxpayer’s chargeable gains for the year (disregarding the annual exempt amount, losses brought forward, and relief under S261B), see Section 261 E.

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

This treatment is also available to trustees and personal representatives, see BIM80725. It is not available to any person within the charge to Corporation Tax.

An example of the effect of a claim under Section 261D is at CG15804.

Relief is available in respect of payments made on or after 29 November 1994.