Brought-forward capital losses for limited companies

Last updated: 6 September 2026

Short version. Capital losses brought forward are an unused balance, not an automatic claim for the whole amount. They reduce chargeable gains subject to the applicable rules.

1. What is a capital loss?

A capital loss is a tax loss on a disposal, such as selling an investment. It is not necessarily the loss in your accounts. Consult your disposal calculation, earlier filed computations and any relevant claims. An unused allowable capital loss can normally be carried forward against later chargeable gains. It does not reduce trading or rental profit.

Do not substitute a trading loss, loan deficit or decline in an asset's book value for an allowable capital loss. Special rules can affect particular assets and transactions.

2. When does the restriction matter?

The restriction on brought-forward capital losses applies to chargeable gains accruing from 1 April 2020. Broadly, the allocated deductions allowance covers gains first and brought-forward losses can cover only half the remaining relevant gains. Current-period allowable capital losses are distinct from brought-forward losses.

The maximum company deductions allowance is normally £5 million for a twelve-month period, shared across relevant loss streams. Short periods have a reduced amount and group companies share an allowance. It is not £5 million for every company or an extra allowance just for gains. Check your actual entitlement and allocation, including other reliefs. A period straddling 1 April 2020 needs its transitional calculation.

3. Worked examples

These examples assume ordinary allowable capital losses, sufficient loss balances, no other reliefs or restrictions and the stated allocation being available. They illustrate relief, not a universal tax bill.

£10,000 gains, no current losses and £15,000 brought forward: with sufficient allowance, use £10,000 and carry £5,000 forward.
£10,000 gains, £3,000 current losses and £12,000 brought forward: with sufficient allowance, use the £3,000 first and £7,000 brought forward. £5,000 remains.
£10 million gains and £10 million brought forward, with £5 million allocated to gains: £5 million plus half the remaining £5 million gives £7.5 million relief. £2.5 million gains remain taxable and £2.5 million losses carry forward.
£1 million gains and £1 million brought forward, but only £200,000 allocated to gains: £200,000 plus half of £800,000 gives £600,000 relief. £400,000 gains remain and £400,000 losses carry forward. This is why £5 million is not a universal trigger.

4. Filing and records

Keep the calculation behind your gains, losses and allowance allocation. The computation should explain the opening balance, losses used and remaining balance. Read how to enter the figures. We rely on your declarations and do not certify entitlement. If you cannot establish the opening balance or allowable deduction, check your records or obtain advice before filing.

Official references

General guidance, reviewed 6 September 2026. Check the rules for your circumstances. Official links do not automatically update our software or this article.