Capital Losses on Shares: How to Claim Them and Carry Them Forward

How a loss reduces your tax

If you sell shares for less than they cost you, the difference is a capital loss. You work it out the same way as a gain: the money from the sale, minus what the shares cost, minus fees. For shares you bought at different times, the cost is the section 104 average cost, the average price of all the shares you hold in that company.

HMRC calls a loss you can use an "allowable loss". A loss can be allowable if a gain on the same sale would have been taxed. So losses on ordinary shares, funds and ETFs in a normal account count, and losses inside an ISA don't. It then has to be claimed (see the 4-year deadline below).

An allowable loss is taken off your gains before the £3,000 tax-free allowance, so it reduces the part of your gains that's taxed. How much of it gets used depends on whether the loss is from this tax year or an earlier one.

Losses in the same tax year

Losses from sales in a tax year are set against gains from the same tax year first. You add up the gains, take off the losses, and then take off the £3,000 allowance from what's left.

You can't choose to hold a same-year loss back. HMRC deducts all of it, even if that takes your gains below £3,000. The allowance you don't use is lost. HMRC will carry an unused loss forward from a year when losses beat gains, but never an unused allowance.

Losses from earlier years

If your losses in a year are bigger than your gains, the unused part carries forward. So does a loss from a year when you had no gains at all.

Brought-forward losses work differently from same-year ones. HMRC only uses as much as it needs to bring your gains down to the £3,000 allowance, and the rest carries forward to the next year. HMRC's manual gives no time limit for using a claimed loss, so it carries forward until your gains use it up.

Example: the same loss, in different years

Say that in the 2026–27 tax year you sell shares in Company A for a £6,000 gain. You also have a £4,000 loss on shares in Company B. Here's how the timing changes the result.

What a loss is worth

A loss saves tax at your Capital Gains Tax rate. That's 18% on gains that fall in your basic rate band (the part of your income taxed at 20%), and 24% above it. Say you pay higher rate Income Tax, have gains of £10,000 in 2026–27, and bring forward a £2,000 loss from an earlier year.

Claiming a loss: the 4-year deadline

Telling HMRC the amount of a loss counts as a claim. It has to be made within 4 years of the end of the tax year you sold in. After that, the loss can't be used at all.

The tax year runs from 6 April to 5 April, so the deadline is always a 5 April:

You don't need to claim a loss in the year you make it. If you had no gains in 2023–24 and didn't send a return, you can still claim that year's loss up to 5 April 2028. Once a loss is claimed, you don't need to claim it again when you use it in a later year.

There's no special form. On a Self Assessment return, putting the loss on the capital gains pages, with your calculations, is the claim. Our calculator works out the gain or loss on each sale, including which purchases each sale is matched against. HMRC's notes for the capital gains pages (form SA108) say to fill them in if you want to claim a loss, even when there's no tax to pay. Our SA108 guide covers the boxes: box 27 for this year's losses, box 45 for earlier losses used this year, and box 47 for what's left to carry forward.

Claiming if you don't do Self Assessment

GOV.UK says that if you've never made a gain and aren't registered for Self Assessment, you can write to HMRC instead of filing a return.

The letter has to give the tax year of the sale and the amount of the loss. GOV.UK doesn't list anything else. Adding the calculation behind the figure (the dates, proceeds, cost and fees) lets HMRC see where the amount came from. The same 4-year deadline applies to a letter as to a return.

GOV.UK doesn't cover people who have made gains before but aren't in Self Assessment now. The law is the same for them, but if you're in that position, check with HMRC how it wants the claim made.

Losses that don't count

As well as ISA losses, these can't be set against your gains, or only against certain ones:

• Losses on shares given or sold to your husband, wife or civil partner can't be claimed. These transfers are normally treated as making neither a gain nor a loss.
• A loss on a sale or gift to a connected person can only be set against gains on other sales or gifts to that same person. Connected people include parents, children, siblings and a company you control. HMRC calls this a "clogged loss", and it asks you to keep a separate record of each one.
• If you buy the same shares back within 30 days, the 30-day rule works out the loss using the buy-back price. If the price hasn't moved much, most of the loss disappears.
• Losses from tax avoidance schemes may not be allowable.

Shares that have become worthless are a different case. You can't sell them, but a negligible value claim lets you treat them as sold and claim the loss. HMRC's helpsheet HS286 explains how.

When to get advice

Losses from sales of ordinary listed shares are something most people can handle themselves. Some cases need a regulated tax adviser. One is clogged losses from sales to family. Another is shares in a small unlisted trading company, where a loss can sometimes be set against income instead. Another is shares under the Enterprise Investment Scheme (EIS) or Seed EIS, which have their own loss rules. So do foreign losses under the foreign income and gains regime, which covers your first 4 years of UK residence after 10 years abroad. The last is a loss in the tax year someone died. This is one of the few cases where a loss can go back to earlier years, and HMRC's helpsheet HS282 covers it.