Carrying forward a CGT Loss?

Ian_W

Do we have to carry forward a CGT loss declared on last years tax return?

Background: Both Mrs W and myself are BR taxpayers, she being totally PAYE - me being part PAYE, part self-employed income.
Previously I declared my SE income by online SA as the income and expenses are pretty straightforward. In April 2005 we sold an overseas holiday home and though I had researched CGT I felt more comfortable submitting returns for her and me through an accountant for the 05/06 tax year.
After allowable deductions, taper & indexation relief, personal allowances and foreign CGT were deducted we had a £300ish CGT loss each.
To my surprise [as even with savings interest etc she comes nowhere near HR] they have asked her to complete a SA form for this year. On the letter it lists reasons why they may ask for one to be completed and one is to carry forward a CGT loss from previous years.
I can't think of anything we could conceivably use the loss against in the future - we now only have our PPR property and our investments are all ISA'd or so small we can easily cover them by our personal allowances if we sold them.
My SE income ceased in September 2006 so I'm hoping after this return we can step off the SA treadmill and it seems silly to carry on for a loss we're never likely to need. So do we need to continue claiming it?

Cook_County

Ian:

1. Foreign CGT is not an allowable deduction.

2. On 9 February you said it proved a good investment, so how does this translate into a big loss?

Ian_W wrote: »

It proved a very good investment for us and we enjoyed owning but the last couple of years we could only get out 2 weeks a year and spent a lot of time on things that needed doing to the apartment rather than holidaying so it was the right time for us to sell. If you decide to go for it - hope it works out as well for you.

Pennywise

Ian_W wrote: »

After allowable deductions, taper & indexation relief, personal allowances and foreign CGT were deducted we had a £300ish CGT loss each.

Are you sure the calculations were correct?

How did you manage to get taper relief if there was a loss - taper relief is applied to reduce the profit - you must have had a profit for there to be any taper relief, and taper relief is never more than the profit.

Also, again, there must have been a profit for you to utilise your personal allowances - they can't be used to create a loss, only used to eliminate a profit.

But from what you say, you infer that taper relief and your personal allowances have "created" a loss, which is not possible - the best they could have done is eliminate the profit.

I think you need to check those calculations to make sure they are right - you still have time to correct the 05/6 tax return if necessary.

monkeymax

Ian_W wrote: »

Do we have to carry forward a CGT loss declared on last years tax return?

Background: Both Mrs W and myself are BR taxpayers, she being totally PAYE - me being part PAYE, part self-employed income.
Previously I declared my SE income by online SA as the income and expenses are pretty straightforward. In April 2005 we sold an overseas holiday home and though I had researched CGT I felt more comfortable submitting returns for her and me through an accountant for the 05/06 tax year.
After allowable deductions, taper & indexation relief, personal allowances and foreign CGT were deducted we had a £300ish CGT loss each.
To my surprise [as even with savings interest etc she comes nowhere near HR] they have asked her to complete a SA form for this year. On the letter it lists reasons why they may ask for one to be completed and one is to carry forward a CGT loss from previous years.
I can't think of anything we could conceivably use the loss against in the future - we now only have our PPR property and our investments are all ISA'd or so small we can easily cover them by our personal allowances if we sold them.
My SE income ceased in September 2006 so I'm hoping after this return we can step off the SA treadmill and it seems silly to carry on for a loss we're never likely to need. So do we need to continue claiming it?

I worked in Processing returns in HMRC and i know that if you were intending carrying forward your CG losses they would send you a return to do this. If you noted in last years return that there was a loss the system would automatically do this. As you have recieved a return for this year you have two things you can do.

Complete the return and send it back with a letter stating your CG losses won't be used and you wish to have no more returns
or
Call into your local HMRC enquiry centre (if you can find one) and speak to an advisor, explain you don't think you need to complete these returns and they may cancel this years return and stop any future ones.

However, as you have SE income, you will still need to complete a reurn this year.

Ian_W

:doh: Dohhhh! Numpty alert!! What can I say?

Pennywise wrote:

But from what you say, you infer that taper relief and your personal allowances have "created" a loss, which is not possible - the best they could have done is eliminate the profit.

Which is exactly right - it was a profit that because of the reliefs available was £300odd pounds under where we would have started paying tax on it!!

What confused me [not difficult] was the letter I mentioned she got asking for a return. It wasn't personalised just the standard one I've had every year but on the back there is a list of a couple of dozen reasons why we may ask for one. It seemed to be the only category that was even remotely close but as jimmo and monkeymax have explained if you're in the system for declaring "non-standard" income you get one until it shows you've nothing but PAYE and taxed interest to declare. So thanks everyone and sorry for the confusion.

I will check the figures again but the accountant we used seemed on the ball. I was anxious enough that it was right to query why he had more taper than I thought was due - he explained the bonus year and that indexing also applied pre 1998.

Cook_County: Stick by what I said in February, it was a good investment for us and the legitimate reliefs under CGT are IMHO pretty generous, particularly for long term ownership, and had we paid some tax that view would not have changed.