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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Relief for losses: unused losses

TCGA92/S2 (2) (a) and (b), TCGA92/S3, TCGA92/S4B (2)

You must add together the allowable losses in the year of assessment and deduct them from the total chargeable gains of the year. Allowable losses which cannot be set against gains of the same year of assessment are carried forward and set against gains which arise in the future. But see CG15813 about the need, under Self Assessment, for taxpayers to claim that losses are allowable.

You utilise losses brought forward only if net gains (that is, total gains less total losses of the year) exceed the annual exempt amount for the year. Any losses brought forward which are not utilised are carried forward and set against future gains.

If the net gains are greater than the annual exempt amount, the amount of losses brought forward you use is the smaller of

  • the total losses brought forward
  • the total necessary to reduce the net gains to the level of the annual exempt amount. Any excess is carried forward.

Losses brought forward from 1996-97 and later years must be used before losses brought forward from earlier years. (CG15812 and CG15813 give more detail on pre-SA and SA losses).

You then deduct the annual exempt amount from the remaining net gains to give the amount chargeable to Capital Gains Tax, see CG18000+.