What can you do if you’ve made capital losses in the 2019/20 tax year?
Wednesday, 01 April 2020
The COVID-19 pandemic has caused great unrest through the global economy and caused radical fluctuations in the value of business and other assets. Many taxpayers will own assets which have fallen in value, such as stocks and shares, and are now wondering how to react, if at all. Although this is primarily a personal financial matter, the tax consequences could be an important factor in this decision.
Do you own failed investments of negligible value?
During the period in which you’ve owned assets that have become worth ‘next to nothing’, you may be able to make a ‘negligible value claim’ to HMRC, which allows you to realise a loss on the assets, which can be offset against other gains made in the year to reduce your capital gains tax liability.
Have you realised capital gains in the 2019/20 tax year?
If you’ve realised gains in this tax year such that you will pay capital gains tax, it may be possible to mitigate this tax charge or eliminate it entirely by making further capital disposals in the tax year (before 6 April 2020) that will make a loss. Although selling assets at a loss is not inherently attractive, there may be some appeal in avoiding a charge to capital gains tax.
Any actions taken in this regard should be taken on a commercial basis, and we encourage anybody making significant decisions about their personal financial situation to take advice from a suitably qualified investment adviser or independent financial adviser.
If you have any queries, or would like to discuss your personal tax situation, please get in touch with your usual MHA Larking Gowen contact in the first instance or at firstname.lastname@example.org.
You can find contact details on the Our People section of the MHA Larking Gowen website.