Use Carried Losses to Reduce Capital Gains Tax
Frequently Asked Questions
Yes. Capital losses that cannot be used in the year they arise can be carried forward indefinitely against future capital gains.
Yes, losses must be claimed within 4 years of the end of the tax year in which the loss arose. Register via self-assessment or by writing to HMRC.
No. HMRC rules require you only use enough carried-forward losses to reduce your gains to the annual exempt amount (£3,000 in 2025/26), preserving the remaining losses for future years.
No. Current-year losses must be offset in full against current-year gains first, before the annual exempt amount is applied. Carried-forward losses can be used more selectively.
Residential property losses can only be offset against residential property gains. Other CGT losses (e.g. shares) can offset any type of gain.
If you sell shares at a loss and repurchase the same shares within 30 days, HMRC 'matches' the disposal to the repurchase, preventing artificial loss creation.
No, capital losses cannot be transferred between spouses or civil partners. However, assets can be transferred between spouses at no gain/no loss to optimise each person's position.
Any excess losses are carried forward to future tax years. Current-year losses are always used first, even if you would prefer to preserve them.
Losses from assets of negligible value (e.g. worthless shares) must be claimed specially. Losses from disposals to connected persons (family members) can only be offset against gains from the same connected person.
The annual exempt amount is applied after losses have reduced gains to the exempt threshold. This means if your net gain is exactly £3,000, you use the AEA and owe nothing — the losses protected your AEA.
In limited circumstances — mainly for shares in qualifying companies that have become worthless — losses may be relieved against income. Seek specialist advice.
Keep records of every disposal, including cost, sale proceeds, and expenses. HMRC recommends keeping records for at least 4 years after the loss year, but indefinitely if losses are being carried forward.