Share loss relief: setting a loss on shares against income

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An exception to the usual rule

Capital losses normally only reduce capital gains. HMRC’s manual (CG15831) describes the main exception: an individual’s allowable losses on certain disposals of unlisted shares in trading companies, where the person disposing of them was the original subscriber. This is "share loss relief", in Chapter 6 of Part 4 of the Income Tax Act 2007.

Because income tax rates are usually higher than Capital Gains Tax rates, and because the relief can be used in a year with no gains, it can be valuable — but the conditions are detailed.

Which shares qualify

Section 131 says you can claim if you make an allowable loss for Capital Gains Tax purposes on disposing of qualifying shares, which means either:

• shares to which EIS relief is attributable; or
• shares in a qualifying trading company that you subscribed for — that is, newly issued to you by the company, not bought from someone else.

The definition of a "qualifying trading company" has many conditions of its own; HMRC’s helpsheet HS286 sets them out. SEIS shares are referred to in the legislation and on the return as well.

Which disposals qualify

Under section 131(3), the disposal must be:

• a sale at arm’s length;
• a distribution in the course of dissolving or winding up the company;
• the company’s dissolution (where the shares are treated as disposed of); or
• a deemed disposal under a negligible value claim.

HS286 confirms that a gift of shares is not a qualifying disposal.

How the relief works

Section 132 lets you claim to deduct the loss in calculating your net income for:

• the tax year of the loss;
• the previous tax year; or
• both — in which case you choose which year is relieved first.

HS286 explains that the loss comes off your total income before your Personal Allowance, so you can’t limit the claim to protect your allowance. Any part of the loss that isn’t used against income stays an allowable capital loss for your gains; any part used against income can’t be used again against gains. If you had EIS income tax relief on the shares, that relief is deducted from the loss first.

Paid on subscription for unlisted shares	£20,000
Proceeds when sold at arm’s length	£2,000
Allowable loss	minus (£18,000)
You might claim to set the £18,000 against your income of the year of the loss or the year before — subject to the cap below.

The cap on reliefs

Share loss relief is one of the reliefs limited by section 24A of the Income Tax Act 2007: the total you can deduct from a year’s income under the capped reliefs is £50,000 or 25% of your adjusted total income, if higher. HS286 notes that the limit does not apply to losses on shares to which EIS or SEIS relief is attributable. See the cap on loss relief.

Deadline

The claim must be made on or before the first anniversary of the normal Self Assessment filing date for the year of the loss (section 132(4)). HS286 gives the example that a loss made in 2025 to 2026 must be claimed against income by 31 January 2028.

Claim a 2026/27 loss against income by 31 January 2029

That is shorter than the 4-year limit for an ordinary capital loss claim, so check this first.

Claiming on the return

HMRC’s notes say to use the Unlisted shares and securities section of the capital gains pages for any shares where share loss relief is claimed. In the 2025–26 edition, boxes there record the amount claimed against the current year’s income and the previous year’s income, and how much of each relates to EIS or SEIS shares. HS286 lists the minimum information to give, including the company’s name, registration number, country of incorporation (and of tax residence, if different), the date the loss arose, and which year to relieve first if you claim for two years.

Sources

Checked 4 October 2026 for the 2026/27 tax year. We read these primary sources for this guide:

1. Income Tax Act 2007, section 131 (share loss relief) (legislation.gov.uk)
2. Income Tax Act 2007, section 132 (entitlement to claim) (legislation.gov.uk)
3. Income Tax Act 2007, section 24A (limit on certain reliefs) (legislation.gov.uk)
4. HMRC helpsheet HS286: Negligible value claims and Income Tax losses for shares (2026) (gov.uk)
5. HMRC Capital Gains Manual CG15831: Losses set against income (gov.uk)
6. HMRC: SA108 Capital Gains Tax summary notes (2025–26 edition) (gov.uk)

Contains public sector information licensed under the Open Government Licence v3.0. This guide adapts and summarises that information in our own words. taxloss.co.uk is an independent guide. It is not affiliated with, endorsed by or connected to HM Revenue & Customs (HMRC) or the UK Government. Spotted something out of date? Tell us.

More on capital gains losses

• 01Capital losses: what counts as an allowable lossWhen you sell or give away an asset for less than it cost you, you may have a capital loss. It only reduces your tax once it is an "allowable loss" — which depends on the asset and on telling HMRC in time.
• 02How to claim a capital loss — and the 4-year time limitA capital loss only counts once you have told HMRC about it, with the amount. Here’s how to do that on your tax return or by letter, and the deadline you must meet.
• 03How capital losses are set against gains — and the annual exempt amountThis year’s losses are used up in full first, even if that wastes your tax-free allowance. Losses brought forward from earlier years are only used to bring your gains down to the annual exempt amount — the rest carries on.
• 04Losses on disposals to family and connected peopleSell or give something to a relative, business partner or a company you control and make a loss, and that loss is "clogged" — you can only use it against gains on other disposals to the same person. Transfers to a spouse or civil partner usually give no loss at all.
• 05Shares that have become worthless: negligible value claimsIf shares (or other assets) you still own have become worth next to nothing, a negligible value claim lets you be treated as having sold them, creating a capital loss. The claim can be backdated — within limits.
• 07Cryptoasset lossesSelling, swapping or spending tokens for less than their cost gives a capital loss you can claim like any other. HMRC treats lost keys and theft differently — and worthless tokens need a negligible value claim on the whole pool.
• 08Losses when you sell property — and the 60-day UK property returnA loss on selling a second home, buy-to-let or land is a capital loss you claim in the usual way. UK residents normally only use the 60-day "Capital Gains Tax on UK property" service when tax is due — non-residents must report every disposal, even a loss.