Taxation of Chargeable Gains Act 1992 section 16

Computation of losses

Section 16 sets out how capital losses on the disposal of assets are calculated and the conditions that must be met for a loss to qualify as an allowable loss.

• Capital losses are computed using the same method as chargeable gains, unless specific exceptions apply (such as those relating to trade losses converted to CGT losses, post-cessation relief, or former employees' employment-related liabilities).
• The rules that determine whether a gain is a chargeable gain also apply to determine whether a loss is an allowable loss — if a gain would not be chargeable, the equivalent loss is not allowable.
• A loss is not allowable unless the individual notifies HMRC of the amount of the loss for the relevant tax year, following the same procedures as a claim for relief.
• A qualifying foreign loss is not allowable if the individual has a foreign gain claim, a foreign income claim, or a foreign employment election in effect for that tax year; and for individuals with a split year, losses arising in the overseas part of the year are treated in the same way as losses of a non-resident.