Taxation of Chargeable Gains Act 1992 section 202

Capital losses

Section 202 provides relief for capital losses that arise when mineral leases or agreements entered into before specified dates come to an end or the related land is disposed of, allowing landowners to crystallise and carry back losses against earlier mineral royalty gains.

• When a mineral lease or agreement entered into before 1 April 2013 (corporation tax) or 6 April 2013 (capital gains tax) expires or terminates, the landowner can elect to be treated as having disposed of and reacquired the land at market value, provided this would give rise to an allowable loss
• The resulting terminal loss can either be treated as an allowable loss in the year the lease expires, or carried back up to 15 years and set against chargeable gains that arose from mineral royalties under the same lease in those earlier years
• Where the land interest is actually disposed of during the lease and an allowable loss arises, the taxpayer can also elect to carry that loss back up to 15 years against earlier mineral royalty gains under the same lease
• Any part of the terminal loss that cannot be relieved through the carry-back mechanism is treated as an allowable loss arising in the period of the relevant event