Offsetting trading losses against Capital Gains

I am coming to the end of a particularly bad year of trading, and believe that I have made a loss of 20,000 for the tax year. I had to sell a rental property I own in the tax year to supplement my living expenses. I estimate that this will realise a capital gain after reliefs of 50,000. Can I claim relief for some of my trading losses against the Capital Gain on my rental property?

1st July 2008

Yes, relief is available in this way, but you must first offset the trading losses against your total income for the tax year, and any excess can be extended and set against your chargeable capital gains for the tax year.

If you do not have any other income in the tax year this will result in a relief of 20,000 being claimed against the capital gain on your property of 50,000, leaving a chargeable gain before other reliefs and annual exemption of 30,000.

This will result in a significant fall in your Capital Gains Tax liability and your local TaxAssist Accountant can advise how to make the claim.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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