Capital Gains Tax Rip-off!

[k k 111]

Hi,

I have a loss of about £50k in capital gains losses.

 

Am I right in understanding that HMRC no longer allow losses to be carried forward indefinitely and I will just have to kiss that money goodbye?

 

One option is to sell other properties which would allow me to use the loss before it "expires", but doesn't seem like a very smart idea in general...

 

Are there any other options that I'm missing? This is a pretty bitter pill to swallow if I can't use the losses as and when I wish to sell up in future.

 

Many thanks!

[Simon Misiewicz]

Capital losses can be carried forward indefinitely, although not beyond the taxpayer’s death. This applies even if gains are made by the deceased’s personal representatives.

 

Losses incurred in a tax year must be offset against any gains in the same year (TCGA 1992, s 2(2)(a)). The taxpayer can choose how such losses are allocated so that, to minimise the overall tax charge, they should first be applied against gains charged at 18% and 28% and any remaining losses could be applied against any entrepreneurs’ relief gains charged at 10%. Any balance of unused losses is carried forward.

 

Losses brought forward from previous tax years must be utilised against any remaining gains of the following tax year after the offset of any losses in that year and the use of the annual exemption (TCGA 1992, s 3(5)). Where so utilised, the taxpayer should again allocate these losses against, first, gains at 18%/28% and, second, ER gains at 10% to minimise the overall tax charge. Any balance of unused losses is carried forward.

 

Note, though, that any clogged loss (arising from a disposal to a connected person) can only be utilised against any gain of the same or a later tax year also arising from a disposal to the same connected person (TCGA 1992, s 18(3)).

 

Further, losses arising after 5 April 1996 must be used before using any remaining unused losses arising before that date.

[k k 111]

Hi Simon,

Many thanks for this. 

 

Best wishes,

Kay

[Simon Misiewicz]

You are very wlecome Kay

[k k 111]

I believe that HMRC's own communications are causing confusion.

 

They state online that capital gains can only be claimed within 4 years, but after calling the HMRC helpline it seems that losses can be offset indefinitely so long as they are reported within 4 years of the loss.

[Simon Misiewicz]

Are you surprised that HMRC cause confusion when they are confused themselves?