ACCA ATX ^UK Syllabus A2. Chargeable gains - Loss on sale of shares of unquoted company - Notes ^{4 / 4}

Relief

Capital losses are normally carried forward and used to reduce future chargeable gains. 

However, there is another use of the capital losses. 

Relief against total income is available if – the loss arises on the disposal of unquoted trading company shares. 

With this claim, the capital loss can be set off against total income of the current year and previous year, this allows the loss to attract tax relief at the higher rates of 45%.

Illustration

Drey subscribed for 5,000 shares in W Ltd., an unquoted trading company in August 2011 for £3 per share. 

On 1 December 2024, the company made major losses and that the shares were now valued at 10p per share. 

He has other income of £45,000. 

If he sells the shares at the current market value, how can he claim relief for his capital loss?

• Solution

  Capital loss

  S.P. 5,000 * £0.1 = £500
  Cost  5,000 * £3 = (£15,000)
  Capital loss £14,500

  Claim against total income of the current year

  Total income £45,000
  Less
  Capital loss (£14,500)
  Total income £30,500