Capital Gains Tax: what you pay it on, rates and allowances
If you make a loss
You can report losses on a chargeable asset to HM Revenue and Customs (HMRC) to reduce your total taxable gains.
Losses used in this way are called ‘allowable losses’.
Using losses to reduce your gain
When you report a loss, the amount is deducted from the gains you made in the same tax year.
If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.
Reporting losses
Claim for your loss by including it on your tax return. If you’ve never made a gain and are not registered for Self Assessment, you can write to HMRC instead.
You do not have to report losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset.
There’s an exception for losses made before 5 April 1996, which you can still claim for. You must deduct these after any more recent losses.
Losses when disposing of assets to family and others
Your husband, wife or civil partner
You usually do not pay Capital Gains Tax on assets you give or sell to your spouse or civil partner. You cannot claim losses against these assets.
Other family members and ‘connected people’
You cannot deduct a loss from giving, selling or disposing of an asset to a family member unless you’re offsetting a gain from the same person.
This also applies to ‘connected people’ like business partners.
Connected people
HMRC defines connected people as including:
- your brothers, sisters, parents, grandparents, children and grandchildren, and their husbands, wives or civil partners
- the brothers, sisters, parents, grandparents, children and grandchildren of your husband, wife or civil partner - and their husbands, wives or civil partners
- business partners
- a company you control
- trustees where you’re the ‘settlor’ (or someone connected to you is)
Claiming for an asset that’s lost its value
You can claim losses on assets that you still own if they become worthless or of ‘negligible value’.
HMRC has guidance on how to make a negligible value claim.
Special rules
HMRC has guidance on the special rules for losses:
- when someone dies
- if you’re non-resident and sell UK property or land
- if you’ve temporarily lived abroad as a ‘non-resident’
- from your income on shares that are unquoted or in the Enterprise Investment Scheme
- on overseas assets if you’re ‘non-domiciled’ in the UK and have claimed the ‘remittance basis’