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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Restrictions: pre-entry loss: time-apportionment: equivalent assets


If the loss relates to an asset treated by paragraph 1(8) Schedule 7A or any other provision as the same as an earlier asset, time-apportionment extends back to the acquisition of the earlier asset. Or to the acquisition of the asset by the earliest transferor in a sequence of no gain/no loss disposals.


In 1994, LS acquires a lease.

In 1995, LS transfers the lease at no gain/no loss to LT.

In 1996, LT acquires the freehold from an unconnected third party.

In 1997, LT transfers the freehold at no gain/no loss to LV.

In 1998, LV joins the M group and later sells the freehold at a loss.

The expenditure taken into account in LV’s loss computation includes the cost of the lease to LS, wasted as appropriate under the rules in TCGA92/SCH8. Time-apportionment on this tranche of expenditure runs from 1994, when LS acquired the lease. LV’s loss computation also includes LT’s expenditure on the freehold in 1996. This expenditure is time-apportioned from 1996.

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.