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Find out more'Can my poorly-performing shares reduce my savings tax bill?'
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In a given tax year, if I sell more shares at a loss than a profit, can I offset this overall loss against, say, interest I’ve earned on cash savings?
Jonathan, High Wycombe
'No - but your losses could prove useful elsewhere'
Samm Galloway, Which? Money expert, says...
Unfortunately not: losses you’ve made on your shares can only be offset against other capital gains, and can’t be used against income such as interest and dividends.
If you’ve made gains in the same tax year as the loss, then the loss must be offset against these gains first, before the tax-free capital gains tax (CGT) allowance is applied. This is currently £3,000, having fallen in recent years.
If the loss is greater than the gain, then the residual loss can be carried forward, provided you register the loss with HMRC.
There’s no time limit on how long the loss carries forward
There’s no time limit on how long the loss carries forward, but it must be used the next time you make a gain greater than the CGT allowance. This will happen until it’s used up. You can’t choose which gains to use losses against.
You can register the loss on your self-assessment tax return for that year. Or, if you don’t usually complete a tax return, you can write to HMRC within four tax years of the tax year in which the loss occurred to register it.
Bear in mind that any interest you earn on investments or savings within a stocks and shares Isa or cash Isa will be tax-free and doesn't need to be declared (as an aside, losses in shares held with an Isa can't be set against capital gains).
You may also be able to earn a certain amount of interest on savings outside an Isa without having to pay tax. The annual personal savings allowance stands at £1,000 for basic-rate taxpayers, £500 for those on the higher-rate and additional-rate taxpayers don’t get an allowance.
- Find out more: Tax on savings interest and investment income explained
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