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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Liability to date of death: losses and annual exemption

TCGA92/S62 (2)

If an individual realises an allowable loss in the part of the tax year before his or her death, those losses must be set first against any chargeable gains accruing in that period. This applies even if it reduces the net chargeable gains below the annual exempt amount for that year.

If there is an excess of allowable losses after this set off those losses may be carried back and set off against gains accruing in the three tax years before the tax year of death. The losses must be set off against gains of a later year first. Losses carried back in this way are only set off so that the net chargeable gains are reduced to the amount of the annual exemption for the year. Any losses that are not set against gains accruing before death are lost. They cannot be used by the personal representatives or the legatees.

For years up to 2007/2008 the rule was modified to take account of taper relief.

The losses cannot be set against gains attributed to the individual by TCGA92/S77, TCGA92/S87 or TCGA92/S89(2).

The legislation does not provide any specific procedures or time limits for dealing with claims to carry back losses of the year of death. The normal procedures and time limits relating to claims will therefore apply.