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HMRC internal manual

Venture Capital Schemes Manual

HM Revenue & Customs
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Share Loss Relief: individual and corporate claimants: individual claimants: a simple case without complications: giving effect to the claim

Once you have established that the claim to Share Loss Relief is competent it follows (in the simple case we are considering) that relief is available against income up to the amount of the allowable loss computed under the TCGA rules or, if this is less, to the maximum permitted under the limit for income tax reliefs (for losses arising in 2013-14 or later VCM74035). Guidance on computing the allowable loss is available in the Chargeable Gains (CG) Manual.

The claim will specify which tax years’ or accounting periods’ income is to be relieved, and the order in which relief is to be given if more than one year is involved. Once relief is available and claimed in a particular year or period it is not possible to restrict the amount actually given to less than the maximum possible, for instance to make use of personal allowances.

If the amount of Share Loss Relief given according to the terms of the claim is less than the maximum available (that is to say it is less than the allowable loss in this simple case) the unused balance retains its character as an allowable loss of the period in which it accrued and may be set against chargeable gains under the usual TCGA rules. After 1993-94, Share Loss Relief cannot be carried forward and allowed in a period after that in which the loss accrued.

To the extent that Share Loss Relief is given in respect of an allowable loss, that loss may not be set off against chargeable gains under the TCGA. TCGA92/S125A allows you to make any adjustments to corporation tax on chargeable gains or capital gains tax necessary to ensure this is so. So if Share Loss Relief is given for a loss which has already been used to reduce gains to a net figure on which capital gains tax has been charged the additional CGT may be assessed, and if it becomes apparent that Share Loss Relief is unused then an equal amount of allowable loss becomes available and relief may be given for it.

It is good practice to inform the office dealing with the corporation tax affairs of the company which issued the shares when you have settled a claim to Share Loss Relief, particularly if you have refused the claim. This will ensure consistency of approach if other individuals or companies make claims in respect of the same company’s shares.