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Irrecoverable loan offset against any future capital gains

Irrecoverable loan offset against any future...

A capital loss exists from a credit balance on a directors loan account which is now irrecoverable. (The company ceased trading.)

Can this loss be offset against any capital gains for example on a future sale of a second home?

Thank you.


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22nd Feb 2016 14:18

section 253 TCGA allows

253 covers irrecoverable loans made to traders.

The borrower needs to be UK resident, and if the loan is irrecoverable, the lost loan is a CGT loss; and section 253 (3) allows an individual to claim the loss.

The loss is automatically carried forwards if it is unused.

Loans made to a profession or vocation are also allowed under section 253 if they prove irrecoverable.

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22nd Feb 2016 16:07

And as a capital loss can be

Thanks for replying CrowtherP.

And as a capital loss it can be used against any type of gain in the future including sale of a second home?

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22nd Feb 2016 15:44

yes - losses are not categorised as such

There are a variety of situations where specific losses [i can't think of one right now but...] might be blocked, but in general terms all ordinary losses [whether property, antiques, land, second residence, foreign gains, loans or sales of art etc.] go against all ordinary capital gains.

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22nd Feb 2016 16:08

Thank you CrowtherP, much obliged.

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22nd Feb 2016 19:12

Off the top of my head, cases where capital losses carried forward are "clogged" (I.e. not generally available against all future gains) include losses on transactions with connected persons and losses on shares acquired in connection with certain employment related schemes.

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22nd Feb 2016 20:41

Thanks johngroganjga, so where an irrecoverable directors loan had to be written off creating a capital loss, that loss can be used against a gain on an eventual sale of a second home, is my understanding correct?

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22nd Feb 2016 20:51

Yes I don't believe such a loss is clogged.

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