Hi @Richard.W , I;m going this wayā¦this is my year end summary based on the XLS Iāve built with your help a long time ago,
So Iāve filled the sections below like this and have used āLosses available to be carried forwardā with my lossesā¦ do we think is the correct way to do it ?
I think the losses you have to carry forward is 3762 - 1828 = 1934, not 3762. You have already used 1828 of your losses against the gains in this tax year. The rule is that losses must be used as far as possible against gains in the same year that the losses took place. You will only carry forward any losses that are in excess of your gains.
I used to misunderstand this and think you could postpone taking losses when gains were already under the CG tax free limit. But a correspondence with HMRC cleared this up in my mind.
Thanks @Richard.W makes sense.
Question about that Carry Forward Losses field: say for example next year 23/24 I post these resultsā¦ say 6k gain 1k loss.
Can I carry forward to 24/25 these 1934 from this year and not use them ? Will I just write 1934 in the same field(tax return 23/24) or leave it empty because I stated them already in the tax return of 22/23 ?
In simpler words, is that field cumulative ? as in I have to sum all previous years carry forward losses and always state them in the last tax return ?
Unfortunately, I think not. As I understand, you must apply any prior years unused losses to your gains at the first opportunity, even if this means you will lose some benefit from the CG tax free allowance that you might otherwise have enjoyed. And any losses not so used within four years become unavailable.
You might check this by askıng at the HMRC customers on Facebook messenger or on X.
I did misunderstand this myself. I had thought some gaming of when to declare losses might be possible, as you are thinking. But I learned that was not the case after and Q&A with a HMRC agent. Seems it was too good to be true.
I believe that once registered, losses can be carried forward indefinitely there is no time limit.
The four year rule is that losses have to be reported to HRMC within 4 years in order to be carried forward
Edit: but as already said by others, in any tax year any loss has to be first applied against any gains even if the gains are below the cgt threshold. So you canāt have a gain of Ā£x and a loss of Ā£x and selectively just carry forward the loss
@WakeMeUp Thank you for that correction on the four year carry forward. But suppose you report a loss two years after it occurred, and if you had reported it earlier then it could have been used up against gains two years ago (gains which had escaped tax because of the CG tax free allowance). What then? Do you have to amend the tax return of two years ago?
If you are doing tax returns then I assume you will include/report losses in the year they occur and in that year they have to be first used against any gain even if the gain is less than the cgt threshold. Thus if you are doing tax returns you will not be reporting a loss a couple of years later.
There are, however, many people who arenāt required to do annual tax returns. Those people will have to report any losses that they wish to carry forward within the 4 years. Again they have to comply with the other rules (ie using the losses in the year that the loss occurred to offset any gainsā¦)
To sum it up: 4k loss, 2k gain I can carry forward 2k. But next year I must use those 2k against my gains(if any), and if still I have losses I can sum the losses of the last + current year in the carry forward losses field.
Correct ?
CARRY FORWARD LOSSES = GAIN - LOSS - CARRY FORWARD LOSSES FROM LAST YEAR.
and if I use these 1935 next year I have to put them in field 45, correct ?
I think you should get professional advice especially if youāre unsure.
I could be wrong (i havenāt need to register losses) but I though 1) if you make a loss in a particular tax year you have to first offset that against any gains in the same year but 2) if you do then register a loss you can elect when to use that loss in the future. Thus I am not sure whether you have to use the loss in the next tax year or whether that decision is optional.
