Claiming Share Loss Relief In Self Assessment Return

tg99

Am looking to claim share loss relief against 15-16 income in my 16-17 tax return. Having input the amount in the 'losses against income - amount claimed against 2015- 16 income' box in the unlisted shares part of the capital gains section, I had thought this would generate the tax relief payment figure in the overall tax return calculation section but nothing has changed.

Later on in the return there is a section Adjustments to Tax Due with one of the boxes called 'decrease in tax due because of adjustments to an earlier year' so I tried putting in there what the figure should be but it won't let me as the error message below comes up:

"You cannot enter an amount for 'Decrease in tax due because of adjustments to an earlier year' since your return does not contain any adjustments which would effect the tax due for a previous year, Please amend."

Does anyone know what I'm doing wrong ? Thanks

Dazed_and_confused

What makes you think you can carry the capital gains loss back to get relief in an earlier year?

tg99

Dazed_and_confused wrote: »

What makes you think you can carry the capital gains loss back to get relief in an earlier year?

It's an EIS company - you are allowed to claim losses against income in the current or previous tax year.

jimmo

The form filling side of things was never my forte (other people used to look after that before the computer took over) and its more than 10 years since I retired but it would be helpful to know exactly which boxes you have completed on form SA108 and how the figures entered have been arrived at.
If I have understood you correctly you are making an NVC now specifying a date within 2016/17. That then creates the revived gain you mentioned in an earlier thread which needs to be included in box 34 and a loss which needs to be entered in box 35.
Then the loss which you wish to set against 2015/16 income needs to be entered in box in box 43.
If you have not already done that please give it a try and see what happens. I don't believe the system will calculate the 2015/16 overpayment at this stage because nothing you do on-line has effect until you actually submit it. If you can get past the error messages that will be something. Unless, of course, someone with more recent experience than mine, chips in.

tg99

Thanks for your reply. From memory I filled it out broadly in line with what you have said but will check exact box numbers and figures etc and report back tomorrow.

tg99

Investment amount was £744 in EIS share that failed so proceeds £0. EIS income tax relief 30% so £223. Hence allowable loss I can claim is £521.

So in unlisted shares and securities section box 31 is 1 disposal, 32 disposal proceeds is zero, 33 allowable costs is £744 (wasn’t sure if £744 or £521 here but found that had no impact on the calculation as the calculation is not reducing my capital gains bill accordingly...which is correct as obviously cannot claim this loss against capital gains if I am choosing to use it against income). Box 36 elected NVC claim. 43 loss claimed against 1516 income I have put £744 as the next box 44 says amount in 43 to which EIS relief is attributable hence I put the income tax relief given of £223 in 44 as I was thinking the system would thus deduct the £223 from the £744 to calculate the allowable loss. But not entirely sure this is right.

The revived gains I have reported not in 34 and 35 but in the listed section as the gain invested in the EIS company was from sale of listed shares.

The error message I mentioned earlier is just in relation to if I try and enter the figure I think I am owed in the adjustments section as I tried this when nothing happened automatically within the end of return calculation section having completed the capital gains section.

Also, re your point about no overpayment being generated at this stage until I actually submit it, I was thinking it would work in similar way to when you claim other reliefs, e.g. when I subscribed to EIS, VCT etc the calculation section recognises I have filled these numbers out in the relevant section and this calculates 30% income tax relief due and thus incorporates into the end of tax return calculation hence generating the overpayment figure. I then submit the return and receive the payment a week or so later.

tg99

Follow up: what I noticed when I looked at my 15-16 return was that the end of the capital gains section is slightly different to that in 16-17 in that it has a ‘summary of computations’ section with a summary of losses used against income...here if I enter in the allowable loss into the losses to be used against 15-16 income box then the overall calculation correctly deducts this as income tax relief on the overall income on which tax is due. Spoke to technician at HMRC who confirmed that yes I should indeed amend my 15-16 return to enter my loss here corresponding to the NVC made in 16-17 return given I want to carry back the loss to 15-16. He thought that there was currently a general issue / error with 16-17 capital gains section of the online return this year hence why I couldn’t get the loss relief claim to appear in the 16-17 return calculation.

[Deleted User]

tg99 wrote: »

Follow up: what I noticed when I looked at my 15-16 return was that the end of the capital gains section is slightly different to that in 16-17 in that it has a ‘summary of computations’ section with a summary of losses used against income...here if I enter in the allowable loss into the losses to be used against 15-16 income box then the overall calculation correctly deducts this as income tax relief on the overall income on which tax is due. Spoke to technician at HMRC who confirmed that yes I should indeed amend my 15-16 return to enter my loss here corresponding to the NVC made in 16-17 return given I want to carry back the loss to 15-16. He thought that there was currently a general issue / error with 16-17 capital gains section of the online return this year hence why I couldn’t get the loss relief claim to appear in the 16-17 return calculation.

Wow - things must have changed! It used to be the case that the relief was given as a 'stand alone claim' - is this no longer the case?

Obviously, as has been said, the tax relief will not be reflected in the 2015/16 calculation. The mechanism in my day (perhaps still the case?) would have been detailed in the additional information box as follows:

Per Capital Gains pages - allowable loss £521 to be set against 2015/16 tax year. Relief due £521 at (tax rate) = £xxx.xx

This amount would then be credited to your self-assessment account. This was also the case with trading losses carried back.

From my edits below I believe that this IS the correct way to do it - ignore the advice given by HMRC in this regard.

One absolutely NEVER NEVER EVER amended an earlier year return

Edit - it is still done like this for trading losses:

Put the loss to be carry back to a previous year
in box 79, and give us the details of the amount
claimed for each year in box 103 ‘Any other
information’.

Further edit - I believe that I was correct: see below:

If you make an allowable loss in 2016 to 2017 you can claim the relief for 2016 to 2017 or 2015 to 2016 or both. You can make those claims as follows:

2016 to 2017 You can claim the relief by making an entry in box 41 on page CG 2 of the SA108 Capital Gains Tax summary pages.
You must also include the capital losses that are the subject of your claim in box 35 on page CG 2 and give details of the capital losses on page CG 3 in the ‘Any other information’ box, box 54 or in your computations.
2015 to 2016 You can claim the relief by making an entry in box 43 on page CG2 of the SA108 Capital Gains Tax summary pages. You must also include the capital losses that are the subject of your claim in box 35 on page CG 2 and give details of the capital losses in the ‘Any other information’ box, box54, on page CG 3 of the SA108 or in your computations.
Any relief due for 2015 to 2016 will be given as an adjustment to the amount of tax for 2016 to 2017.

https://www.gov.uk/government/publications/negligible-value-claims-and-income-tax-losses-on-disposals-of-shares-you-have-subscribed-for-in-qualifying-trading-companies-hs286-self-assessment-he/negligible-value-claims-and-income-tax-losses-on-disposals-of-shares-you-have-subscribed-for-in-qualifying-trading-companies-hs286-self-assessment-he--2

I know jimmo is ex HMRC and so am I. He is absolutely correct when he says that it is one thing knowing the legislation but an entirely different matter in knowing how to complete the forms.

jimmo

Still not too many takers on this thread, just a couple of old fogies (sorry po2 but I'm pretty sure you said you'd retired a while back).

As we've both said, the principles and law haven't changed since I retired but the form filling procedures have. As regards submitting your Return online there have been quite a number of threads on here in recent years where people have been puzzled by the amount of tax they think the system is demanding. A very common answer is that before a Return is actually submitted your computer screen shows the liability for the year and, in particular, that calculation does not take notice of any payments on account already made. It takes at least 24 hours after actual submission for the system to tell you what you really owe. Hence my logic is that the HMRC system will not calculate the relief due from setting the loss against earlier years income until after you submit the Return.
In the continuing absence of posters with up to date experience I suggest you give it a go. If it doesn't work there is plenty of time to think again and amend your Return.
Otherwise, if memory serves me correctly, you said that there is a proposal to dissolve the company this month. So you are now playing with fire. If HMRC don't receive your Return, or a stand alone claim by post, before the company is dissolved, you will have lost your opportunity to claim.

tg99

Thank you both for your replies.

First of all, Jimmo re your final comment, it made me realise I should have mentioned one important point - as per my previous post re the NVC, because I anticipated it shortly becoming dissolved then I did not want to risk not putting in the NVC in time so I have already actually submitted the 16-17 return with the NVC and the figures noted above in the various boxes. This was I think a couple of weeks ago but there has been no change to my tax liability or repayment or credit generated.

Hence having done some further reading / investigation it then occurred to me that I maybe needed to put the figure as a tax adjustment too in 16-17 return (the help box for this part does say about using capital losses against income as one of the few scenarios where it would be appropriate to fill in this tax adjustment figure) - but when I was playing around with making an amendment to the return to do this I was getting the error message noted above hence couldn’t do so and therefore also decided it was worth phoning HMRC as well as posting again on here as I could not find anything specific in the manuals.

The technician I spoke to at HMRC informed me that I could amend the 15-16 return as per my previous post just like I would say amend it say when receiving an EIS certificate for a different investment in 16-17 that I wanted to carry back to 15-16 to get the 30% income tax relief. He was pretty adamant this is entirely appropriate and did seem to have decent knowledge around the subject.

PO2 - re your point about putting the figure in the additional info box, can I ask how HMRC would then know to give me the tax credit / repayment as what would trigger them to manually read the additional info white boxes in my tax return (ie I’m presuming HMRC does not read these for every single tax payer who submits a SA return)? Or is it a case I would have to follow up with a phone call or letter to make sure they picked up this claim from my return?

Thanks.

[Deleted User]

tg99 wrote: »

Thank you both for your replies.

First of all, Jimmo re your final comment, it made me realise I should have mentioned one important point - as per my previous post re the NVC, because I anticipated it shortly becoming dissolved then I did not want to risk not putting in the NVC in time so I have already actually submitted the 16-17 return with the NVC and the figures noted above in the various boxes. This was I think a couple of weeks ago but there has been no change to my tax liability or repayment or credit generated.

Hence having done some further reading / investigation it then occurred to me that I maybe needed to put the figure as a tax adjustment too in 16-17 return (the help box for this part does say about using capital losses against income as one of the few scenarios where it would be appropriate to fill in this tax adjustment figure) - but when I was playing around with making an amendment to the return to do this I was getting the error message noted above hence couldn’t do so and therefore also decided it was worth phoning HMRC as well as posting again on here as I could not find anything specific in the manuals.

The technician I spoke to at HMRC informed me that I could amend the 15-16 return as per my previous post just like I would say amend it say when receiving an EIS certificate for a different investment in 16-17 that I wanted to carry back to 15-16 to get the 30% income tax relief. He was pretty adamant this is entirely appropriate and did seem to have decent knowledge around the subject.

PO2 - re your point about putting the figure in the additional info box, can I ask how HMRC would then know to give me the tax credit / repayment as what would trigger them to manually read the additional info white boxes in my tax return (ie I’m presuming HMRC does not read these for every single tax payer who submits a SA return)? Or is it a case I would have to follow up with a phone call or letter to make sure they picked up this claim from my return?

Thanks.

You are correct in that HMRC do not read every tax return but one with such a claim (loss reliefs etc) WOULD be dealt with by a more senior officer (used to be an inspector) who would make the adjustment to your self-assessment account. They most definitely would pay attention to any information in the additional information box.
I have checked with my former colleagues in my old firm and they have confirmed that the method that I have suggested is still appropriate.