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HMRC internal manual

Capital Gains Manual

Absolute entitlement: losses of trustees: restriction of beneficiary's relief after 16 June 1999

Where the beneficiary has become absolutely entitled to an asset on or after 16 June 1999, and is treated as if he had incurred an allowable loss on that occasion, that loss can only be set against chargeable gains accruing on the same asset or, where the asset is an estate, interest or right in or over land, that asset or any asset deriving from that asset, as explained in TCGA92/S71 (2C). An example would be where the beneficiary holds the freehold interest in land and the trustees hold the leasehold interest, and then appoint it to him at a loss.

The loss is to be set against the gain in priority to any other rules about the order of losses, in particular those relating to taper relief.