Taxation of Chargeable Gains Act 1992 Schedule 7A paragraph 6

Restrictions on the deduction of pre-entry losses

Paragraph 6 of Schedule 7A sets out the order in which pre-entry losses (capital losses that arose before a company joined a group) are to be deducted from chargeable gains, and how the corporate loss restriction rules interact with those deductions.

• Pre-entry losses arising in the current accounting period are deducted first, but only against gains permitted under the matching rules in paragraph 7 of the Schedule.
• Pre-entry losses brought forward from earlier periods are deducted next against any remaining qualifying gains, subject to the corporate loss restriction cap introduced by Finance Act 2020.
• Non-pre-entry allowable losses are then deducted from whatever chargeable gains remain, also subject to the corporate loss restriction cap, and any unused losses of either type are carried forward.
• Companies may elect which specific pre-entry losses are set against which specific gains; in the absence of an election, losses are matched to gains in chronological order of accrual.