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D1.925 Corporate tax relief for capital losses—overview

Unless there is a specific provision to the contrary, a capital loss is computed in the same way as a capital gain. Where a capital loss arises on the disposal of an asset, it is an allowable loss if, had the calculation shown a gain, that gain would have been a chargeable gain¹. An allowable loss does not include a loss that, if it had been a gain, would have been exempt from corporation tax².

An allowable capital loss incurred by a company in an accounting period is deducted from any chargeable gains realised by that company in the same accounting period. Any of the loss which cannot be so relieved is carried forward and deducted from chargeable gains realised by that company in a subsequent accounting period although the use of carried-forward capital losses can be restricted from 1 April 2020 (see 'Restrictions on relief for carried-forward capital losses' below)³.

Capital losses are carried forward without time limit. There is no capital