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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Mineral leases: terminal loss relief: effect of claim

If a valid claim under TCGA92/S202 (3) is made, the person making that claim can elect for the terminal loss to be utilised in one of two ways.

TCGA92/S202 (6)

The loss can be treated as an allowable loss arising in the year of assessment or accounting period in which the relevant event, see CG71740, occurred. That loss can then be set off or carried forward in the same way as any other allowable loss.

TCGA92/S202 (9) - (11)

Alternatively the terminal loss can be carried back against the chargeable gains arising from the receipt of mineral royalties under the lease in question, see CG71700- 71720, that is the lease whose ending gave rise to the opportunity for the claim under TCGA92/S202 (2).

It is important to note that the terminal loss cannot be carried back and offset against any other gains, that is gains other than those arising from the royalties received under the mineral lease in question.

If the taxpayer elects to carry back the terminal loss, it is set off first against the relevant chargeable gains arising in the year of assessment or accounting period immediately preceding that in which the relevant event occurred. Any remaining balance of terminal loss is then set against the relevant gains arising in the next preceding year of assessment or accounting period, and so on. However, no part of the terminal loss can be carried back to any year of assessment or accounting period which ended more than 15 years before the relevant event occurred.

Any balance which remains after all the relevant gains arising in the 15 years in question have been relieved, is treated as an allowable loss arising in the year of assessment or accounting period in which the relevant event occurred. This balance is then available for set off or carry forward in the normal way.