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HMRC internal manual

Capital Gains Manual

Restrictions: capital losses: pre-entry loss: on pre-entry assets

Where the loss arose on a pre-entry asset, there are special rules for the computation of the proportion of the loss which is to be treated as a pre-entry loss. The basic rule, in paragraph 2 Schedule 7A, is that straight-line time-apportionment applies to establish the pre-entry proportion of an allowable loss on the disposal of a pre-entry asset, see CG47620+. But there is an alternative method of calculation based on a market value election, in paragraph 5 Schedule 7A, see CG47720+.

Note: Additional rules relating to loss buying were enacted in FA 2006. See CG47020+ for guidance on the rules which apply in priority to TCGA92/SCH7A for accounting periods ending on or after 5 December 2005.

FA11/S46 and FA11/SCH11 greatly simplified the rules in TCGA92/SCH7A for the deduction of losses on or after 19 July 2011. See CG47400+ for guidance on loss streaming from that date.