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Utilising Capital Gains Tax Losses | Can I deduct capital losses from capital gains?

Utilising Capital Gains Tax Losses | Can I deduct capital losses from capital gains?

Mike Wakeford

What are Capital Losses
Usually, if you sell an asset for less than you paid, you will make a capital loss. As a general rule, if the support would have been liable to CGT had a gain occurred, then the loss should be an allowable deduction.
The exact treatment of losses depends on whether they are:

  1. losses of the same year of assessment as the gains;
  2. losses of earlier years of assessment;
  3. losses of the tax year of death or
  4. losses which may, exceptionally, be carried back from a later year of assessment.

How to claim back your losses
These deductions of an allowable loss from chargeable gains do not require a claim or extend the time limit for enquiring into the original capital loss claim. Gains accruing in a tax year may be chargeable to CGT at different rates. Therefore, the tax effect of utilisation of losses and the annual exempt amount set off against those gains can vary.
In most circumstances, capital losses and the annual exempt amount can be deducted in the most beneficial way to the individual. This will usually be against gains that are charged at the highest marginal rate. A claim for capital losses does not have to be made immediately and can be made up to 4 years after the end of the tax year that the relevant asset was disposed of.
What to do with unused capital losses?
Where unused capital losses remain that cannot be set against gains of the same year, these losses are carried forward to be set against future gains. It is only necessary to utilise losses brought forward if net gains exceed the annual CGT exempt amount for the year.
Contact Us
If you need support on the utalisation your capital losses best, speak to a member of our tax team today for further help and how to best use your capital losses.