Guide
Capital losses: which year to use them and what carries forward
Current-year losses and older unused losses are not interchangeable. Their order can decide how much remains available for a future gain.
Quick answer
Allowable capital losses normally reduce gains in the same tax year first. Earlier unused losses then reduce remaining gains only as far as the annual exempt amount, preserving the balance for later years. The loss must qualify and be properly claimed.
On this page
A falling account balance is not always an allowable loss
A loss normally needs a relevant disposal and the correct tax basis. An unsold investment that has fallen in value is not automatically a loss to enter against another gain. There are separate negligible-value claim rules where an asset has become worthless or nearly so.
Work from the purchase, matching, sale and cost records. An ISA loss does not become an ordinary taxable-account loss merely because another account has made a gain. Confirm the scope before adding a number to the loss ledger.
Current-year losses are used first
Allowable losses arising in the year reduce the gains of that same year. Do not choose to hold them all back simply to make fuller use of the annual exempt amount.
For example, £10,000 gains and £9,000 current-year allowable losses leave £1,000. With an available £3,000 annual exemption, no ordinary CGT is due. The unused part of the annual exemption is not carried forward. You cannot instead use only £7,000 of that current loss to manufacture a £2,000 carried loss.
Older losses are preserved at the allowance
Suppose 2026/27 gains are £10,000, current-year losses are £2,000 and reported unused earlier losses are £6,000. Current-year losses leave £8,000 gains.
Use only £5,000 earlier losses to reach the available £3,000 exemption. The ordinary tax is zero and £1,000 earlier loss remains for later years. Subtracting the whole £6,000 before the allowance would unnecessarily use £1,000 of that loss.
If current losses already exceed the gains, the unused eligible loss can carry forward. Keep its origin and claim evidence; it is not a new annual allowance.
Check the claim window and reporting route
HMRC says eligible losses can normally be claimed up to four years after the end of the tax year of disposal. A loss in 2026/27 therefore normally needs its claim by 5 April 2031. Special rules and much older losses can differ.
Report a claim on the relevant tax return, or follow HMRC’s written route if you have not made gains and are not registered for Self Assessment. Do not assume that a broker displaying a loss has notified HMRC for you. Keep the acknowledgement and calculation.
Restrictions and other reliefs need their own check
Losses on disposals to connected people can be restricted rather than available against every unrelated gain. Transfers to a spouse or civil partner commonly use different rules and do not automatically create a claimable loss.
Some qualifying share-loss claims can involve Income Tax relief or negligible-value elections. Do not deduct the same loss twice across CGT and another relief. These choices sit outside the ordinary annual-gains tool; use the applicable HMRC helpsheet and keep a record of the relief claimed.
A ledger that makes next year easier
Keep one line for each loss: asset and disposal date; tax-year origin; proceeds, allowable cost and loss; claim date/reference; restrictions; amounts used by year; and remaining balance. Reconcile the carry-forward total after each return.
Enter current losses and earlier reported losses in different fields in the calculator. The result shows usage and the remaining eligible balance, which you can compare with your records. It cannot decide whether an unverified loss qualifies.
What to do next
- Separate losses made this year from unused losses already reported for earlier years.
- Check whether a connected-party or other restriction applies.
- Keep evidence of both the original loss and any amount used later.
- Make a tax-year loss ledger from the disposal records.
- Apply current losses before brought-forward losses in the supported calculator.
- Report or claim eligible losses through the correct HMRC route.
Try the tool
Put the explanation into your own figures
Check the tool’s supported scope, keep the assumptions with the result, and use the official route when you need to report or pay.
About this guide
Written by Dan. Dan has spent 20 years working across payroll, HR, benefits and reward. IsMyPayRight is an independent personal project, not connected with any employer or with HMRC.
AI tools help with research and drafting. The official sources used are listed at the end of the guide.
This is general guidance, not a professional review of your circumstances. Read our editorial process and the corrections log.
Methodology and sources
See how the calculations work, which sources they use, how results are tested, and which payroll details the estimates cannot verify.
Common questions
- Can I save all my current-year capital losses for later?
- Allowable current-year losses normally reduce gains of that same year first. You cannot choose to hold them back simply to make fuller use of the annual exemption.
- Must I use all my earlier capital losses before the annual allowance?
- Earlier unused eligible losses are normally used only as far as needed to reduce the remaining gain to the annual exempt amount. Preserve the rest with a record of its origin, claim and usage.
Official sources
Use these references to check the rules behind this guide. Check the tax year and your circumstances before applying an example to your own pay.