Relief for CGT losses

Usually, if you sell an asset for less than you paid for it you would make a capital loss. As a general rule, if the asset would have been liable to CGT if a gain had resulted when sold, then the loss should be an allowable deduction.

The exact treatment of CGT losses depends on whether they are:

• losses of the same year of assessment as the gains,
• losses of earlier years of assessment,
• losses of the tax year of death, or
• particular losses which may, exceptionally, be carried back from a later year of assessment.

These deductions of an allowable loss from chargeable gains do not require a claim and do not extend the time limit for enquiring into the original loss claim.

Gains accruing in a tax year may be chargeable to CGT losses at different rates. Therefore, the tax effect of losses and the annual exempt amount set off against those gains can vary.

In most circumstances, allowable CGT losses and the annual exempt amount can be deducted in the way that is most beneficial to the individual. This will usually be against gains that are charged at the highest rate.