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Posted: Wed May 11, 2005 11:33 am
by TaxVirgin
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.

Posted: Wed May 11, 2005 2:12 pm
by King_Maker
Yes, but only in respect of certain types of shares.

Does your Capital Loss arise from shares?

Posted: Thu May 12, 2005 1:39 am
by TaxVirgin
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

Posted: Thu May 12, 2005 2:15 am
by King_Maker
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?

Posted: Thu May 12, 2005 4:03 am
by TaxVirgin
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?

Posted: Thu May 12, 2005 5:07 am
by King_Maker
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.

Posted: Thu May 12, 2005 8:19 am
by TaxVirgin
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.

Posted: Thu May 12, 2005 8:33 am
by King_Maker
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.