Tax loss questions answered

There’s no penalty for not reporting a loss — but a loss you don’t report can’t be used. The law says a capital loss is only an allowable loss once you have given HMRC notice of it, with the amount, within 4 years of the end of the tax year.

Report it in the capital gains pages of your tax return, or by letter if you’re not in Self Assessment and have never made a gain.

More detail: How to claim a capital loss — and the 4-year time limit

Up to 4 years after the end of the tax year in which you disposed of the asset. A loss made in 2026/27 (the tax year ending 5 April 2027) must be claimed by 5 April 2031. The deadline calculator gives the date for any year.

More detail: How to claim a capital loss — and the 4-year time limit

No. Losses brought forward from earlier years are only used to bring your gains down to the annual exempt amount (£3,000 in 2026/27) — the rest carries on. It is losses made in the same tax year that are set off in full, even if that takes your gains below the allowance. Try the set-off illustrator.

More detail: How capital losses are set against gains — and the annual exempt amount

Generally not — capital losses carry forward. The main exception is the tax year someone dies: losses that can’t be used in that year can be carried back against gains of the three previous tax years, latest first, only down to each year’s annual exempt amount.

More detail: How capital losses are set against gains — and the annual exempt amount

If you still own the shares and they have become worth next to nothing, you can make a negligible value claim to be treated as selling them, creating a capital loss. You also need to notify the loss. If the company has already been dissolved, you’re treated as having disposed of the shares when it was dissolved.

If you subscribed for the shares in an unlisted trading company (including EIS or SEIS shares), you may be able to set the loss against your income — see share loss relief.

More detail: Shares that have become worthless: negligible value claims

HMRC’s view is that theft isn’t a disposal, because you still own the tokens and have a right to recover them — so victims of theft can’t claim a capital loss. Losing your private key isn’t a disposal either, though HMRC says a negligible value claim may be possible if there’s no prospect of recovering access.

More detail: Cryptoasset losses

If you’re UK resident, the 60-day return is for reporting and paying Capital Gains Tax due on a UK residential property gain — so a loss normally doesn’t need one (you may choose to file one if you paid tax on account on an earlier sale in the same year). You still need to claim the loss through Self Assessment or by letter to use it. If you’re not UK resident, you must report every disposal of UK property or land, even a loss.

More detail: Losses when you sell property — and the 60-day UK property return

Yes, usually. Sideways relief lets you set a trading loss against your total income — including a salary — for the year of the loss, the year before, or both. The trade must be commercial, partial claims aren’t allowed, and the relief is capped at £50,000 or 25% of adjusted total income if higher. For a 2026/27 loss, claim by 31 January 2029.

More detail: Setting a trading loss against other income (sideways relief)

Possibly. Early years loss relief lets a loss in the first four tax years of a trade be carried back against your total income of the three previous tax years, earliest first — which can include employment income. There’s a stricter test that profits could reasonably be expected within a reasonable time.

More detail: Early years loss relief: losses in the first four years

31 January 2028 — the first anniversary of the 31 January 2027 filing date (Income Tax Act 2007 s64(5)). HMRC’s 2026 partnership notes give the same date. HMRC’s 2026 helpsheet HS227 says 31 January 2027, which doesn’t match the legislation.

More detail: Setting a trading loss against other income (sideways relief)

Yes. Several reliefs against general income — including sideways relief, early years relief and property loss relief — are capped at the greater of £50,000 and 25% of your adjusted total income for the year. Non-active traders face a separate £25,000 cap. Losses set against profits of the same trade aren’t capped.

More detail: The cap on loss relief and other restrictions

Yes, for losses from 2024/25 onwards. The restriction on cash-basis trading losses was removed from 6 April 2024, so they can be used like any other trading loss. (Cash-basis losses for 2013-14 to 2023-24 still can’t be set against other income, and property businesses on the cash basis still can’t get sideways relief.)

More detail: Losses under the cash basis

Usually not. A rental loss is normally carried forward against future profits of the same property business. Only the part of a loss that comes from capital allowances or certain agricultural expenses can be set against other income — and not if you use the cash basis.

More detail: Rental (UK property business) losses

HMRC’s manual says property losses can’t be carried forward after the property business ceases. GOV.UK says that if you continue the same property business and start renting again within 3 years you may be able to use earlier losses, depending on the circumstances.

More detail: Rental (UK property business) losses

Not for residential lettings. Finance costs on residential property aren’t deducted from rental income; instead they give a basic-rate tax reduction, and any unused amount is carried forward as finance costs. Interest on non-residential property is still deductible.

More detail: Rental (UK property business) losses

Company losses are relieved within Corporation Tax — against the company’s own profits, by carrying back 12 months, carrying forward, or surrendering to other group companies. The income tax reliefs for sole traders on this site are for individuals. Speak to the company’s accountant.

More detail: Company trading losses: an overview

You can usually amend a return within 12 months of the 31 January deadline. After that, many loss claims can still be made as stand-alone claims in writing, as long as their own time limit hasn’t passed — for example a capital loss can be notified up to 4 years after the end of the tax year.

More detail: Amending a return or claiming later

The reliefs and their time limits are the same. What changes is how you claim: under Making Tax Digital for Income Tax you report losses and make claims through your compatible software when you complete your tax return, rather than in the Self Assessment boxes.

More detail: Making Tax Digital for Income Tax from April 2026

GOV.UK says at least 22 months after the end of the tax year if you’re not self-employed and filed on time, and at least 5 years after the 31 January deadline if you are self-employed. If you’re carrying a loss forward, it’s sensible to keep the evidence until the loss is used up and the returns using it can no longer be checked.

More detail: Records and evidence HMRC may ask for

TaxAid runs a free helpline for people who can’t afford professional advice (its website says it usually helps people earning under £30,500, and that it can’t help with Corporation Tax). Tax Help for Older People is now part of TaxAid. LITRG publishes free guidance. See our help page.

More detail: When to get professional help