You will probably be aware that if you sell something and make a profit on it, you likely have tax to pay. This is known as Capital Gains Tax.
But were you aware that if you lose money on selling something, or maybe you had something stolen, it might give you a loss that you can use against other gains and reduce a future tax bill?
Capital Gains Tax is payable on a ‘disposal of an asset’. That could be the sale of a property or shares, or it could be the sale of a piece of artwork or an antique (it may be useful to read HMRC's guide to what is included https://www.gov.uk/capital-gains-tax-personal-possessions.) Often shares and properties are known assets to your tax adviser or accountant. So if you make a loss on these the chances are it will have been captured on a self-assessment tax return, meaning that loss can be used against other gains in the future.
But what if you don’t have an accountant, or you sell something they don’t know about? Further still, what if you don’t file a self-assessment tax return? Many individuals invest in artwork, antiques or other assets that would be chargeable if disposed of for a profit, and allowable if there was a loss. However, they are not capturing those losses on a tax return, and so aren’t able to use them against gains.
As the expectation grows of an increase in Capital Gains Tax, or abolition of reliefs, there will be a focus on losses available to reduce the taxable gains. It will become more important than ever to ensure that any losses are recorded and to be able to use them against any gains.
If you have any questions on Capital Gains Tax, or on any related tax matters please contact our specialist advisors to find out more.