Taxation of Chargeable Gains Act 1992 section 4B

Deduction of losses etc in most beneficial way

Section 4B requires that where a taxpayer has allowable losses and other deductions available, these must be set against chargeable gains in whichever way produces the lowest overall tax charge for the taxpayer.

• Where losses or other deductions can be set against gains in more than one way, the taxpayer must use them in the most tax-efficient manner — that is, the way that results in the lowest capital gains tax liability.
• This rule applies to allowable losses (both current year and brought forward), the annual exempt amount, and any other available deductions from chargeable gains.
• Because different types of gains may be taxed at different rates (for example, gains qualifying for business asset disposal relief versus standard gains), the order in which losses are allocated against those gains can significantly affect the total tax payable.
• The provision was introduced by Finance Act 2019 and ensures a consistent, taxpayer-favourable approach to loss allocation rather than leaving the ordering to chance or disadvantageous default rules.

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