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HMRC internal manual

Capital Gains Manual

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


  • paragraph 3 Schedule 7A treats the actual loss as a loss on the disposal of a pre-entry asset,


  • the expenditure actually allowed exceeds the actual cost of the assets to which the disposal is treated as relating, see CG47691

the pre-entry loss is the sum of

  • that excess, and
  • what the pre-entry loss would be apart from paragraph 4(3) Schedule 7A

except that the pre-entry loss cannot exceed the actual loss.

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.