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HMRC internal manual

Venture Capital Schemes Manual

Share Loss Relief: definitions: introduction

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.

The Share Loss Relief legislation uses several specific terms which are defined for its own purposes. It also adopts, with or without modification, certain terms and their definitions from TCGA 1992. This part of the guidance brings together the principal terms and their definitions.

ITA07/S151 provides a number of definitions for the purposes of relief to individuals in respect of non-EIS shares. These definitions apply in relation to the disposal of shares after 5 April 2007. The equivalent definitions in relation to disposals before 6 April 2007 are in ICTA88/S576(5).

CTA10/S90(1) provides a similar range of definitions for Share Loss Relief claimed by companies. These definitions apply for accounting periods ending on or after 1 April 2010. For accounting periods ending after 5 April 2007 but before 1 April 2010, the corresponding provisions were at ICTA88/S576L.

ITA07/S189 to S199 provide definitions for the purpose of EIS and the Share Loss Relief provisions adopt some of those definitions.

TCGA92/S288 provides definitions of many terms used in that Act.

### Term ### See  
Associated companies VCM71020  
Bonus shares VCM71020  
Civil Partner VCM71020  
Corresponding bonus shares VCM71020  
Enterprise Investment Scheme (EIS) relief VCM71020  
Excluded company VCM71020  
Group VCM71020  
Holding company VCM71020  
Investment company VCM71020  
Mixed holding VCM71020  
Mixed holding VCM71020  
Qualifying shares VCM71020  
Qualifying subsidiary VCM71020  
Qualifying trading company VCM71020  
Registered industrial and provident society VCM71020  
Research and development VCM71020  
Seed Enterprise Investment Scheme (SEIS) relief VCM71040  
Shares VCM71030  
Spouse VCM71040  
51% subsidiary VCM71040  
Trading company VCM71040  
Trading group VCM71040  
Year of the loss VCM71040