Capital Gains – If you are investing in any assets other than your own home and they grow in value, you will be making a Capital Gain. Any such asset sold or transferred and where subsequently any Capital Gains arise, you must report these to HM Revenue & Customs.
Capital Losses – However, if that investment fails or becomes worthless, then you would have a “Capital Loss”.
Capital Losses do not need to be reported as there is no tax payable. But we do advise that you should consider reporting these losses. Because reported capital losses can be used to reduce the tax on any realised current or future Capital Gains. Unused Capital losses can be carried forward indefinitely!
Annual Exemption – Any gains realised that are below the “annual exemption” do not incur any tax nor need to be reported. From 6th April 2023, the annual exemption reduces from £12,300 to £6,000 and then from 6th April 2024, it reduces again to £3,000! Gains above this amount are reportable and taxable. Therefore, it is important that you get any Capital Losses recognised to reduce any future Capital Gains Tax.
Past Capital Losses – Any capital losses you have realised in the past should be registered with HM Revenue & Customs as soon as possible. You can go back 4 years to make that claim.
E.g., if you have any losses from 2019/20, you should consider making a claim as soon as possible and before 5th April 2024.
Negligible Value Claims – You may have shares in listed companies that have become worthless or lost most of their value, in this case, you should consider making a “negligible value claim”.
If you need any help or advice, please give us a call. At Jays Accountants, we have successfully applied for negligible value claims on behalf of clients.
If you have any further questions or require help from us, please call 01252 375466 and ask for Ram.