Capital Loss Offset against personal income tax?


Postby TaxVirgin on Wed May 11, 2005 11:33 am

Hi,

Is it possible to offset a capital loss against
personal income tax?

If so, please could some one advise me how?

Many thanks,

N.
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Postby King_Maker on Wed May 11, 2005 2:12 pm

Yes, but only in respect of certain types of shares.

Does your Capital Loss arise from shares?
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Postby TaxVirgin on Thu May 12, 2005 1:39 am

Yes, my capital losses arise from badly chosen ordinary shares. And I was hoping to use this to offset my personal tax return after recently becoming a higher rate tax payer.

Do you think the tax man will allow me to do this?

Cheers,

Naran
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Postby King_Maker on Thu May 12, 2005 2:15 am

Broadly speaking, if the shares were acquired by subscription (not by gift or purchase), and the company was an unquoted trading company (including AIM), then any subsequent capital loss can be set against your income tax liability.

To claim such an allowable loss, you need to complete the CGT pages of the SA Return.

How did the Loss arise - sale, negligible value,winding up etc?
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Postby TaxVirgin on Thu May 12, 2005 4:03 am

Thanks for all your input.

The loss occured by various shares going into liquidation. As I said v. poorly chosen shares :-(

I never noticed the CGT section when I completed
my tax return for 04/05.

Is there any hope for me, oh maker of kings?
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Postby King_Maker on Thu May 12, 2005 5:07 am

But did you *subscribe* for the shares in question?

The CGT pages are supplementary pages. They should be downloadable from the IR's website.

You have up to 12 months after the Filing Date (normally 31 January)to amend your Return.
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Postby TaxVirgin on Thu May 12, 2005 8:19 am

No, these were shares which I bought via a broker from the UK market. All of these were non-AIM shares, and appeared to have good prospects at the time. So, I guess I did not `subscribe' for them.
TaxVirgin
 
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Postby King_Maker on Thu May 12, 2005 8:33 am

Unfortunately, it looks like you are restricted to utilising your Loss against future Capital Gains.

Don't forget that a Capital Loss is not an allowable Loss until it calculated and notified to HMRC (formerly the Inland Revenue). There is a time limit of ~ 5 years 10 months from the tax year in which it arose.
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