Plain English · 31 terms
Glossary of tax loss terms
The words you’ll meet on HMRC pages and tax returns when you’re dealing with a loss, explained briefly — with a link to the guide that goes further.
A
- Adjusted total income
Broadly your total income, with payroll giving added back and gross pension contributions taken off. It sets the 25% figure in the cap on certain income tax reliefs.
- Allowable loss
A capital loss that can be set against gains. A loss is allowable only if a gain on the same asset would have been taxable, and only once you have told HMRC about it (quantifying the amount) within the time limit.
- Annual exempt amount
The amount of capital gains you can make each tax year before Capital Gains Tax is due — £3,000 for individuals in 2026/27. GOV.UK also calls it the tax-free allowance. It can’t be carried forward.
Read more: How capital losses are set against gains — and the annual exempt amount
B
- Brought-forward loss
A loss from an earlier tax year that hasn’t yet been used. Brought-forward capital losses are only used to bring your gains down to the annual exempt amount.
Read more: How capital losses are set against gains — and the annual exempt amount
C
- Capital allowances
Tax deductions for the cost of certain business assets, such as plant and machinery. They can create or increase a trading loss; for landlords, the capital allowances part of a loss can sometimes be set against other income.
Read more: Rental (UK property business) losses
- Capital loss
A loss when you sell, give away or otherwise dispose of an asset for less than its allowable cost. It is worked out in the same way as a gain.
- Carry back
Using a loss against income or profits of an earlier year, which can produce a tax repayment. Trading losses can be carried back in some cases; capital losses generally can’t (except in the year of death).
Read more: Early years loss relief: losses in the first four years
- Carry forward
Keeping an unused loss to set against future gains or profits. Trading losses carry forward against the same trade, rental losses against the same property business, capital losses against future gains.
Read more: Carrying a trading loss forward
- Cash basis
Working out profits on money in and out, rather than on an accruals basis. It has been the default for eligible sole traders and partnerships since 2024/25, and for most individual landlords with receipts of £150,000 or less.
Read more: Losses under the cash basis
- Clogged loss
A capital loss on a disposal to a connected person. It can only be set against gains on other disposals to that same person, while you are still connected.
Read more: Losses on disposals to family and connected people
- Connected person
For Capital Gains Tax, includes close relatives and their spouses or civil partners, business partners, a company you control and some trusts. Disposals to connected people are usually treated as made at market value.
Read more: Losses on disposals to family and connected people
D
- Deductions allowance
For companies: up to £5 million a year (shared across a group) of profits that carried-forward losses can cover in full. Above it, only 50% of remaining profits can be covered.
Read more: Company trading losses: an overview
- Disposal
Selling, giving away, swapping or otherwise transferring an asset, or getting compensation for it. A disposal is what creates a capital gain or loss.
E
- Early years loss relief
Relief for a trading loss in the first four tax years of a trade, set against your total income of the three previous tax years, earliest first (Income Tax Act 2007 s72).
Read more: Early years loss relief: losses in the first four years
G
- Group relief
Surrendering one company’s loss to another company in the same 75% group, to set against its profits.
Read more: Company trading losses: an overview
M
- Making Tax Digital for Income Tax
HMRC’s system requiring some sole traders and landlords to keep digital records, send quarterly updates and file their tax return through compatible software — from 6 April 2026 for qualifying income over £50,000.
Read more: Making Tax Digital for Income Tax from April 2026
N
- Negligible value claim
A claim to be treated as having sold an asset that has become worth next to nothing, and bought it back at that value — creating a capital loss without a real sale.
Read more: Shares that have become worthless: negligible value claims
- Non-active trader
Someone who spends less than an average of 10 hours a week personally on a trade’s commercial activities. Their sideways relief is capped at £25,000 a year.
- Normal self-assessment filing date
The 31 January after the end of the tax year. Several loss relief deadlines are set at the first anniversary of this date.
Read more: Deadlines for loss claims
- Notional trade
For income tax, each partner’s share of partnership profit or loss is treated as coming from a separate trade that the partner carries on alone.
Read more: Partnership losses
O
- Overpayment relief
A written claim for tax you think you have overpaid, available up to 4 years after the end of the tax year when it is too late to amend the return.
Read more: Amending a return or claiming later
P
- Property business
All your lettings in the same capacity form one business. A UK property business and an overseas property business are separate, and losses of one can’t be used against the other.
Read more: Rental (UK property business) losses
Q
- Qualifying income (MTD)
For Making Tax Digital, your total self-employment and property income before expenses, based on your previous tax return.
Read more: Making Tax Digital for Income Tax from April 2026
- Quarterly update
Under Making Tax Digital, a cumulative summary of your self-employment and property income and expenses sent through software — not a tax return.
Read more: Making Tax Digital for Income Tax from April 2026
S
- Section 104 pool
HMRC’s name for the pool in which tokens of the same type are held for Capital Gains Tax, with one pooled cost. A negligible value claim on tokens has to cover the whole pool, not individual tokens.
Read more: Cryptoasset losses
Relief that lets a capital loss on certain shares you subscribed for — in a qualifying unlisted trading company, or with EIS relief — be set against your income.
Read more: Share loss relief: setting a loss on shares against income
- Sideways relief
Setting a trading loss against your total income of the loss year and/or the previous year (Income Tax Act 2007 s64). The law also uses the term for early years relief.
Read more: Setting a trading loss against other income (sideways relief)
T
- Terminal loss
The loss of the final 12 months of a trade that has permanently stopped. It can be set against profits of the same trade in the final tax year and the three before.
Read more: Terminal loss relief when a business stops
- Trading loss
A loss from a trade, profession or vocation, worked out in the same way as a profit.
U
- UK property return (60-day)
The report made through HMRC’s Capital Gains Tax on UK property service within 60 days of completing a sale of UK residential property when tax is due — and by non-residents for any UK property or land disposal.
Read more: Losses when you sell property — and the 60-day UK property return
- Unique Taxpayer Reference (UTR)
The reference number HMRC gives you when you register for Self Assessment. You’ll need it for returns, amendments and stand-alone claims.
Read more: Amending a return or claiming later