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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Relief for losses: example

Mr D carries forward losses of £10,500 from 2008-09.

In 2009-10 he has gains of £16,300 and losses of £3,500.

The annual exempt amount for 2009-10 is £10,100.

To compute the amount of chargeable gains assessable for 2009-10:-

1) Deduct total losses of the year from total gains:

Total gains £16,300
Total losses (£3,500)
Net gains £12,800

2) Deduct the annual exempt amount:

Net gains £12,800
Annual exempt amount £10,100

3) You compare this figure with the total losses brought forward and set the smaller of the two against the net gain:

Amount remaining chargeable (as in 2 above) £2,700
Losses brought forward (£10,500)
You take the smaller figure of £2,700.  

4) The position can then be summarised:

Chargeable gains   £16,300
Losses of the year (£3,500)  
Losses brought forward (£2,700) (£6,200)
Annual exempt amount   £10,100
Amount chargeable to Capital Gains Tax    

5) You have used only part of the losses brought forward. The balance is carried forward:

Losses brought forward (£10,500)
Used in 2009-10 ( £2,700)
Losses carried forward ( £7,800)