Personal Tax- How are capital losses offset against capital gains and edit it?

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Personal Tax- How are capital losses offset against capital gains and edit it?

9th February 2012

IRIS Personal Tax- How are capital losses offset against capital gains and how to edit this? Also if you have any Foreign Tax credit relief claims.

IRIS PT automatically offsets the current year gains against current year losses or brought forward losses.

The losses usage are set in the most beneficial way automatically by IRIS.

You only have the option to amend the asset acquisition /disposal date which then changes the way the loss is used. You have to add a note under Capital Additional Information to explain this date change of the asset.

I have two disposals: why is the loss used on one asset and not the other. The losses usage are set in the most beneficial way automatically by IRIS and the offset order cannot be amended unless you edit the acquisition /disposal date.

Also check if one asset is ticked Residential and the other is not – if this is correct then PT will always apply the loss usage to the higher tax rate property e.g the Residential asset and this cannot be changed even by editing dates. If you disagree with the loss allocation then read below on how to manually edit it.

Need Foreign Tax credit relief to be used against gains? you need to edit the CG tax calculation (reduce the amount)– For example: A gain has Foreign tax credit relief and you want to amend the allocation of loss between gains.

Go to Edit | Capital assets | Edit | losses and other info | Capital gains adjustment as a negative value (this will reduce the CG tax calc). Also put a note in as ‘Additional info’ explaining why you adjusted the CG tax.

NOTE: You may not be able to claim BOTH the Foreign tax credit relief and a Capital gains adjustment as it can cause a 3001 6492 rejection from HMRC. Untick the Foreign tax credit relief claim and make the relevant entry in the adjustment box.

PT rules in the 2010/2011 period – How It offsets in the order below :

1) The gains made on and after 23/06/2010 that DO NOT qualify for entrepreneurs relief

2) The gains made on and before 22/06/2010

3) Then the gains made on and after 23/06/2010 that DO qualify for entrepreneurs relief For example: There are brought forward losses in 2011 which are greater than the current year gains. PT will first offset the losses with the gain that has the latest acquisition date. It will keep on offsetting up to the last £10,100 gain which will be offset against annual exemption. The remainder of the losses will be carried forward.