Losses - making the best of a bad situation
It is important that you make the best use of your capital losses – even if you have not been able to sell shares. If you own shares in companies that have substantially dropped in value, gone bust, etc you can claim that those shares now have a negligible value. The amount you originally paid for the shares will be treated as a loss, which can be set against your other gains to reduce your total capital gains tax liability. If the shares were in an unquoted trading company you may even be able to claim the loss against income.
You can also claim tax relief on the loss if you have guaranteed a loan made to the UK trading business, and you have had to pay up under that guarantee because the borrower defaulted. The amount you paid counts as a capital loss in your hands that you can use to reduce the tax on your other capital gains. Similar rules apply where you have loaned the money personally. None of this will get your money back – but it might help ease the pain.
Date: 23rd April, 2007
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