VCM46350 - VC loss relief: general: years against which relief can be allowed: example

ICTA88/S574 (1)

The following examples show how VC loss relief may be allowed in respect of an allowable loss on a qualifying disposal of qualifying shares against income of up to two years.

Years from 1994-95 onwards

A taxpayer has an allowable loss of £80,000 in 1998-99, income (before personal or other allowances) of £25,000 in 1998-99 and income of £20,000 in 1997-98. The taxpayer may claim VC loss relief under ICTA88/S574 (1) as follows:

If the taxpayer claims for both years, the £35,000 balance of the loss not used is set against any chargeable gains realised by the taxpayer in 1998-99, or is carried forward and set against future gains.

If the allowable loss was only £30,000 the taxpayer could claim:

• VC loss relief of £25,000 for 1998-99 and either claim VC loss relief for 1997-98 on the balance of £5,000 or set this against any chargeable gains of 1998-99 or later years,

or alternatively could claim

• VC loss relief of £20,000 for 1997-98 and either claim VC loss relief for 1998-99 on the balance of £10,000 or set this against any chargeable gains of 1998-99 or later years.

Years before 1994-95

A taxpayer has an allowable loss of £50,000 in 1990-91, income of £15,000 in 1990-91 and income of £17,000 in 1991-92. The taxpayer may claim VC loss relief under ICTA88/S574 as follows:

If the taxpayer claims for both years, the £18,000 balance of the loss not used is set against any chargeable gains realised by the taxpayer in 1990-91, or is carried forward and set against future gains.

Remember, you cannot limit the VC loss relief claimed for a year to preserve, for example, personal allowances that would otherwise be replaced by VC loss relief.