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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Losses: example: effect of claims under both Section 261D and Section 263ZA

TCGA92/S261D (6), TCGA92/S263ZA (3)

This example deals with the combined effects of claims under Sections 261D and S263ZA, although in practice an individual is likely to only be able to claim the benefit of one of the reliefs.

Mr A incurred qualifying post-cessation expenditure of £30,000 on 8 April 2009. He also incurred qualifying expenditure of £50,000 for the purposes of TCGA92/S263ZA (3). His total income for the year 2009-10 was £45,000. He had chargeable gains of £18,000 and allowable losses of £4,000 in 2009-10. He had capital losses of £10,000 brought forward from an earlier year. He made claims under TCGA92/S261D (6) and TCGA92/S263ZA (3) for the excess expenditure to be set against his chargeable gains.

Without the claims, Mr A’s CGT position for 2009-10 would have been as follows:

Chargeable gains 18,000
   
Allowable losses accruing in the year 4,000
Losses brought forward (restricted) 3,900
   
Net chargeable gains 10,100
Annual exempt amount 10,100
   
Amount chargeable to CGT NIL
   
Losses to carry forward 6,100

Following the claims, Mr A’s CGT position for 2009-10 is as follows:

Note that the Section 263ZA(3) relief is given before the Section 261D relief.

Chargeable gains 18,000
   
Allowable losses 4,000
   
Net chargeable gains 14,000
Section 263ZA(3) relief (50,000-45,000) 5,000
  9,000
Section 261D relief (restricted under Section 261E) 9,000
   
Amount chargeable to CGT NIL
   
Losses to carry forward 10,000