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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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Share Loss Relief: background: what Share Loss Relief does

Share Loss Relief allows capital losses which arise in respect of shares to be set against a person’s income providing certain conditions are met. Without the provisions which are now at ITA07/PT4/CHP6 and CTA10/PT4/CHP5, allowable losses computed under TCGA 1992 could only be relieved by setting them against chargeable gains on other assets. Relief against income may be more valuable to the investor than relief against capital gains, and the purpose of Share Loss Relief is to encourage entrepreneurs to invest in unquoted trading companies.

In earlier versions of this manual Share Loss Relief was called ‘VC Loss Relief’.

Share Loss Relief is available both to individuals (who pay income tax) and to companies (which generally pay corporation tax), although only investment companies are eligible to claim it.

The conditions which must be met for Share Loss Relief to be available have evolved over time, and the relevant statute was in ICTA 1988 until the Tax Law Rewrite Project.