Under current rules certain carried forward trading losses may only be offset against 50% of company profits (after annual deductions allowance of £5M has been utilized).

New proposals will see an equivalent rule apply to carry forward capital losses, in effect meaning that only 50% of a subsequent year’s capital gain may be offset by carry forward losses (exceeding the combined £5M allowance for Income and capital.)

When?
A consultation will run until January 2019, with rules expected to take effect on 1 April 2020.

Action/Opportunity:
With full capital losses still available for in-year disposals, these new rules are likely to create important deadlines for Property Lawyers seeking to close transactions before their clients’ year end. Failure to close a sale ‘in year’ could significantly impact the sellers CGT position.