CG15410 - Capital allowances: assets disposed of at a loss

TCGA92/S41 (2)

If an asset is disposed of at a loss, TCGA92/S41 (2) provides that in the computation of the loss, expenditure is to be excluded to the extent to which any capital allowance or renewals allowance has been or may be made in respect of it. The effect of this computational adjustment is

• to reduce the amount of the loss, or
• to restrict the loss to nil.

Section 41 cannot convert a loss into a gain. The purpose of this restriction is to prevent relief being given twice for the same expenditure, once under the capital allowances code and once under the capital gains code. For examples of computations where the expenditure has been restricted see CG17430+, where the topic is dealt with in detail, and CG16900+.