VCM46300 - VC loss relief: general: how relief allowed to individuals

ICTA88/S574

VC loss relief under ICTA88/S574 is allowed in a similar way to relief for trading losses under ICTA88/S380. The guidance in the Relief manual at Re2050 onwards on how the latter is allowed should be followed.

A claim under ICTA88/S574 is in respect of the allowable loss for CGT purposes incurred on the disposal of qualifying shares. Relief may only be claimed for the full amount of the loss - partial claims cannot be made. It is not, for example, possible to restrict the VC loss relief claimed for a year to the amount required to reduce the taxpayer's income to the level of personal (or other) allowances.

For 1994-95 and for subsequent years relief may be claimed:

• in the year in which the loss arose, or
• in the year preceding the year in which the loss arose.

If the loss exceeds the income of the year for which relief is claimed then the taxpayer may claim relief for the balance of the loss in the other year. The taxpayer may claim relief for either or both years and may choose which year should take priority. If the taxpayer claims relief for both years the claim should make clear which year is to take priority.

If for one year of assessment a taxpayer claims relief under Section 574 for losses arising in both that year and the following year, relief is allowed for losses arising in the year of claim in priority to losses arising in the next year.

The balance of any loss not set against income may be allowed against the claimant’s chargeable gains of the year in which the loss arose, or be carried forward and set against future chargeable gains.

There was a slightly different regime for 1993-94 and earlier years. VC loss relief could be claimed against income of the year in which it arose or income of the following year.

See the examples at VCM46350.