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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Example: Liability to date of death and carry-back of losses

Mrs G died on 30 September 2010. In the period 6 April 2010 to 30 September 2010 she realised chargeable gains of £1000 and allowable losses of £10,000. In the three preceding years of assessment her net chargeable gains were

2007-08 £20,000
2008-09 £ 3,000
2009-10 £ 8,000
  1. Firstly set the 2010-2011 losses against her gains of that year.
Chargeable Gains   £1,000
Allowable losses £10,000  
Set Off £1,000 £1,000
Net chargeable gains   Nil
Excess losses available to carry back £9,000  
  1. Set off excess losses against gains of earlier years, considering later years before earlier years. Therefore consider 2009-10 first.
Chargeable gains   £12,000
Covered by annual exemption   £10,100
Limit set off to   £1,900
Net chargeable gains   Nil
Allowable losses brought back £9,000  
Set-off 2009-10 £1,900  
Excess loss to carry back £7,100  
  1. Consider next 2008-09

Net chargeable gains of £3000 are already wholly covered by annual exemption. Therefore none of the losses brought back should be set against these gains.

  1. Consider next 2007-08
Chargeable gains £20,000
Covered by annual exemption £9,200
Available to set loss against £10,800

As this exceeds the losses brought back of £7100 all those losses can be set against the 2007-08 assessment.

Net chargeable gains before set off £20,000
less losses brought back £7,100
Revised net chargeable gains for 1991-92 £12,900
less annual exemption £9,200
Gains chargeable to tax £3,700


Had the chargeable gains for 2007-08 been only £10,000 so that the excess over the annual exemption was only £800 then the set off would have been limited to £800 . The benefit of the remaining losses of £6,300 (£7,100 - £800) would have been lost as these losses could not be set off against any other chargeable gains. They cannot be carried back to any earlier years. Also they cannot be carried forward to set against any gains accruing to the personal representatives or the legatees.