Capital Gains Tax Losses 2026/27

How capital losses reduce your CGT bill

A capital loss arises when you dispose of an asset for less than you paid for it (after deducting allowable costs). Losses from the same tax year are set against gains from the same tax year first. Any remaining losses can be carried forward indefinitely to set against future gains.

Losses are deducted before the annual exempt amount is applied. This ordering matters: it means losses are used first, which can sometimes reduce or eliminate the benefit of the annual exempt amount if the net gain after losses falls below £3,000 anyway.

The ordering: losses, then annual exempt amount

HMRC's ordering rules:

1. Calculate gross gains and losses for the tax year
2. Deduct current-year losses from current-year gains
3. If gains still exceed losses, deduct brought-forward losses — but only enough to reduce the net gain to the annual exempt amount level (£3,000 for 2026/27)
4. Deduct the annual exempt amount from whatever net gain remains

Note the subtlety in step 3: brought-forward losses are only used to the extent needed to bring the gain down to the exempt amount level. You do not have to use more brought-forward losses than necessary — HMRC preserves the excess for future years.

Worked example

In 2026/27 Emma sells shares at a £20,000 gain. She also sold different shares at a £5,000 loss in the same year.

If Emma is a higher-rate taxpayer, CGT at 24% on £12,000 is £2,880. Without the loss, she would have had a £17,000 taxable gain and a CGT bill of £4,080 — a saving of £1,200 from the £5,000 loss.

If Emma also had £8,000 of brought-forward losses from previous years, she could use £12,000 of those (bringing her net gain down to exactly £3,000, i.e. the exempt amount) and preserve the remaining £8,000 for future years — but since her net gain after current-year losses is already £15,000, she could use £12,000 of brought-forward losses to reach the £3,000 exempt threshold, resulting in zero CGT.

Carrying losses forward

Capital losses can be carried forward indefinitely — there is no time limit. However, you must claim them by telling HMRC. The usual way is via your Self Assessment tax return for the year in which the loss arose. If you do not file a Self Assessment return, you can write to HMRC to claim the loss.

Losses are tracked by HMRC in your CGT record. When you use them in a future year, you report them on that year's Self Assessment return.

The annual exempt amount is use-it-or-lose-it

Unlike losses, the £3,000 annual exempt amount cannot be carried forward. If your net gains in a tax year are less than £3,000, you simply do not use all of it — the unused portion is lost. It does not add to next year's exempt amount.

This is why the ordering matters: if you use brought-forward losses to reduce a gain to zero before the exempt amount is reached, you have "wasted" the exempt amount for that year. HMRC's rule limiting brought-forward loss usage (step 3 above) exists precisely to avoid this outcome.

You must report losses even if no tax is due

A common oversight: if you make a capital loss and have no gains to offset it against, there is still no CGT to pay — but you must tell HMRC about the loss within four years of the end of the tax year in which it arose if you want to carry it forward. The deadline for claiming losses for 2026/27 is 31 January 2032.

If you do not claim the loss within this window, it is forfeited. You cannot claim it later.

What losses cannot do

• Losses cannot be set against income — only against capital gains
• Losses on assets that were gifts to a connected person (e.g. a family member) can only be offset against gains on disposals to the same connected person
• Losses on assets that are exempt from CGT (e.g. your main home) do not create allowable losses
• Bed-and-breakfasting rules prevent artificial loss creation by buying back the same shares within 30 days

Official sources

• GOV.UK — Capital Gains Tax rates
• GOV.UK — CGT rates and allowances guidance

Frequently asked questions