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Capital Losses
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- Lemon Slice
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Capital Losses
Hi folks,
Just doing my self assessment, I recorded a capital loss last year which may or may not ever be used to offset against a future gain. My question is do capital losses have to be carried forward each tax year on the return, or are they just recorded the once and that's it?
Thanks.
Just doing my self assessment, I recorded a capital loss last year which may or may not ever be used to offset against a future gain. My question is do capital losses have to be carried forward each tax year on the return, or are they just recorded the once and that's it?
Thanks.
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- Lemon Quarter
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Re: Capital Losses
Fluke wrote:Hi folks,
Just doing my self assessment, I recorded a capital loss last year which may or may not ever be used to offset against a future gain. My question is do capital losses have to be carried forward each tax year on the return, or are they just recorded the once and that's it?
Thanks.
Only the once, however it can be useful each year to record a white box note re unused b/fwd losses if capital gains pages are not needed every year, avoids them becoming lost and forgotten over time.
My software (Taxcalc) does this for me
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- Lemon Slice
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Re: Capital Losses
Charlottesquare wrote:Fluke wrote:Hi folks,
Just doing my self assessment, I recorded a capital loss last year which may or may not ever be used to offset against a future gain. My question is do capital losses have to be carried forward each tax year on the return, or are they just recorded the once and that's it?
Thanks.
Only the once, however it can be useful each year to record a white box note re unused b/fwd losses if capital gains pages are not needed every year, avoids them becoming lost and forgotten over time.
My software (Taxcalc) does this for me
That's a good idea Chalottesquare, no I don't have any need for the capital gains pages this year so I'll just use the additional info box as you suggest. Very helpful, thanks.
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- Lemon Slice
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Re: Capital Losses
Further to this I have reported capital losses to be carried forward on my self assessment in previous years. I am now in the situation where I am thinking of selling assets this tax year which will generate capital gains in excess of this year's CGT allowance. My question is...is it possible to verify that the losses declared in previous years have been accepted by HMRC and are available to me before I blow this year's allowance? I never received any acknowledgement of the losses declared at the time and I can see nothing in my online account which shows these losses.
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- Lemon Half
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Re: Capital Losses
langley59 wrote:[My question is...is it possible to verify that the losses declared in previous years have been accepted by HMRC and are available to me before I blow this year's allowance? I never received any acknowledgement of the losses declared at the time and I can see nothing in my online account which shows these losses.
No, I don't believe so until you actually attempt to utilise the capital losses brought forward.
Unless anyone knows differently.
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- Lemon Slice
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Re: Capital Losses
langley59 wrote: My question is...is it possible to verify that the losses declared in previous years have been accepted by HMRC and are available to me before I blow this year's allowance? I never received any acknowledgement of the losses declared at the time and I can see nothing in my online account which shows these losses.
If you have shown these on your tax return and HMRC haven't opened an enquiry into it within the time limit, then they have been 'accepted'. I guess the real question is have they kept a record of the unused losses? I suppose the only way to be sure is to contact them and ask.
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- Lemon Half
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Re: Capital Losses
Gersemi wrote:If you have shown these on your tax return and HMRC haven't opened an enquiry into it within the time limit, then they have been 'accepted'.
In the old days Capital Losses weren't determined until utilised (in most situations).
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg21500#special-rules-for-losses-arising-before-1996-1997 does appear to support what you've said though, in that the comments under that sub-heading Special rules for losses arising before 1996-1997 no longer appear to apply (other than the order of set-off). They commence with For years before the introduction of Self Assessment there was no statutory mechanism for agreeing or litigating the amount of capital losses in the absence of gains for them to be set against, ....
I guess the real question is have they kept a record of the unused losses? I suppose the only way to be sure is to contact them and ask.
In langley59's case the capital losses to be carried forward were on his/her self assessment in previous years. Isn't the record therefore prior Tax Returns.
In our (not mine) situation we have continued, year in, year out, to complete the relevant parts of https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/787346/sa108_2019.pdf
including the heading 2018-19 capital losses - other information Losses available to be carried forward. Despite not always, in some years, having to complete Capital gains summary pages at all. In such a way that the latest Tax Return is up to date on that front.
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- Lemon Slice
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Re: Capital Losses
Gersemi wrote:langley59 wrote: My question is...is it possible to verify that the losses declared in previous years have been accepted by HMRC and are available to me before I blow this year's allowance? I never received any acknowledgement of the losses declared at the time and I can see nothing in my online account which shows these losses.
If you have shown these on your tax return and HMRC haven't opened an enquiry into it within the time limit, then they have been 'accepted'.
Is there a time limit for individuals? I can no longer find a link I used to have to the old manual which I recollect as saying that, for individuals, losses claimed and carried forward should be noted without comment because it is only necessary for HMRC to look into whether to accept or reject claimed losses if/when an attempt is made to actually use them. Wording was along the lines that it made no difference to the tax assessable in the year under review so consideration of validity was to be deferred until it did. Ring a bell with anyone?
[Edit: Ooops! Didn't see PD's post before eventually submitting this after fruitless search for relevant page in old manual]
Cheers!
Last edited by JonE on November 8th, 2019, 2:46 pm, edited 1 time in total.
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- Lemon Half
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Re: Capital Losses
JonE wrote:Ring a bell with anyone?
Yes, see the reply immediately preceding yours!
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- Lemon Quarter
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Re: Capital Losses
langley59 wrote:Further to this I have reported capital losses to be carried forward on my self assessment in previous years. I am now in the situation where I am thinking of selling assets this tax year which will generate capital gains in excess of this year's CGT allowance. My question is...is it possible to verify that the losses declared in previous years have been accepted by HMRC and are available to me before I blow this year's allowance? I never received any acknowledgement of the losses declared at the time and I can see nothing in my online account which shows these losses.
What do you mean by "before I blow this year's allowance"? I think I am right in saying that you will have to use it before making use of any losses c/f and you can't c/f any unused gains allowance. I am pretty sure that I have a letter agreeing losses up to a certain date, before I started doing returns on-line. Perhaps you meant before you exceed the current year's allowance.
I really must start doing my return for last year. I shall do doubt have lots of queries myself.
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- Lemon Slice
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Re: Capital Losses
Yes that's right. I could have phrased it better. I wouldn't be happy with myself if I exceeded this year's allowance thinking that I had losses brought forward to offset any excess gain only to find out that HMRC do not recognise/accept the losses I reported in prior years. I could call them to enquire but I am reluctant to draw attention to myself.Bouleversee wrote:What do you mean by "before I blow this year's allowance"? Perhaps you meant before you exceed the current year's allowance.
Thanks all for the replies.
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- Lemon Quarter
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Re: Capital Losses
if you declared the losses within the allowed time period following the actual loss...and assuming that you have a record of your tax return you shouldnt have any problems...I never have
hmrc might.... if you unlucky..be unable to find your establishment of the loss...but you will be able to assist with your copy!
hmrc might.... if you unlucky..be unable to find your establishment of the loss...but you will be able to assist with your copy!
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- Lemon Half
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Re: Capital Losses
mutantpoodle wrote:if you declared the losses within the allowed time period following the actual loss...and assuming that you have a record of your tax return you shouldnt have any problems...I never have
This being Self Assessment doesn’t mean anyone at HMRC has actually looked at your Tax Returns at all. The fact that you have never had a problem doesn’t mean that others don’t!
The figures are merely captured from hard copy returns or processed via the online returns. HMRC then make it clear they can check what you have included during the time period available to them.
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- Lemon Quarter
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Re: Capital Losses
indeed.
checked within the time period (looked at or not) they say...ie 12 months from date of submission
whilst i dont know what would happen BEYOND that time period...they do suggest that the return is agreed if not queried within the 12 months
I imagne that if they find issues with 'this years' return they reserve the right to go back further...??
perhaps wrongly...but I am taking that as acceptable and defined.
I havent had any questioned...and hopefully other woud not either.........same applies to paper returns
checked within the time period (looked at or not) they say...ie 12 months from date of submission
whilst i dont know what would happen BEYOND that time period...they do suggest that the return is agreed if not queried within the 12 months
I imagne that if they find issues with 'this years' return they reserve the right to go back further...??
perhaps wrongly...but I am taking that as acceptable and defined.
I havent had any questioned...and hopefully other woud not either.........same applies to paper returns
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- Lemon Half
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Re: Capital Losses
mutantpoodle wrote:[checked within the time period (looked at or not) they say...ie 12 months from date of submission
Yes for standard enquiries, as long as the date of submission was timely in itself.
whilst i dont know what would happen BEYOND that time period...they do suggest that the return is agreed if not queried within the 12 months
I imagne that if they find issues with 'this years' return they reserve the right to go back further...??
https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch56100 may be worth a read if one has concerns on that front.
It includes:
“Discovery” assessment (or amendment of partnership statement) where loss of tax due to deliberate behaviour of person or agent.
Time Limit: 20 years from the end of the year of assessment.
An easier to follow randomly found article is here https://www.uhy-uk.com/resources-publications/tax-hub/tax-blog/how-long-are-your-tax-returns-open-to-an-hmrc-enquiry/.
Not that I'm suggesting such a situation would apply to you or to langley59!
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- Lemon Slice
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Re: Capital Losses
What I think I might do this current tax year is to sell sufficient assets to generate a capital gain slightly in excess of this years CGT allowance, against which I shall offset a portion of my losses reported in previous years. This should enable me to test the offset of my losses brought forward without taking too much financial risk in the event that they are disallowed. Then the following year I should be able to act with more confidence.
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