Tax Talk: Losses
Summary
Occasionally the investor knows that their investment is a dead duck, so rather than wait any longer for the price to pick up they simply take the hit and move whatever money they can recoup elsewhere. Since 2003, HMRC has not allowed losses on disposals of deeply discounted securities to be offset against other income unless they were bought before the new rules came in. But in the case of those deeply discounted securities I mentioned earlier where losses are not allowed, or even in the case of offshore non-reporting funds where gains are charged to Income Tax while losses are offset against capital gains, the investor will still end up with a tax liability. One of the reasons why at FSL we are proud of our new and improved What If report is that we can show the tax effect of a client’s disposals and those the client is considering carrying out, so that they can see not just the cash they’ll get out of their position but how it impacts their final taxable income and gains – and any losing positions from which they could still find a benefit. Still, with inflation rising, belts tightening, and more losses being claimed than ever before, it looks like taxpayers themselves may be wising up to where they can make the tax system work for them.
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