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HMRC internal manual

Capital Gains Manual

Restrictions: pre-entry loss: anti-flooding rule for pooled assets

TCGA92/SCH7A/PARA4 (9) - (11)

The rule in paragraph 4(9) Schedule 7A defines the relevant allowable expenditure attributable to the post-entry element of the disposal. This is the amount of relevant allowable expenditure which would have been deducted on a disposal of that element treated as a separate asset, and treated as including only assets which have not been pooled with other assets. For the purpose of identifying the individual post-entry assets included in the notionally separate asset, a first in/first out (FIFO) rule applies.

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.