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HM Revenue and Customs Brief 41/10


HM Revenue and Customs -Tax Authorities

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Issued 11 October 2010

Share Loss Relief - relief for subscriptions by joint owners or nominees Sections 131 to 151 ITA 2007 (formerly Sections 574 to 576L ICTA 1988)


This brief explains a change in our practice on relief against income for capital losses made on shares subscribed for in qualifying trading companies ('share loss relief'). Our change of practice applies where individuals subscribe for a joint holding of shares, or subscribe for shares through a nominee.


If an individual subscribes for shares where

  • Enterprise Investment Scheme (EIS) income tax relief is attributable to those shares, or
  • they are shares in a qualifying trading company (as defined by Section 134 ITA 2007)

and makes a loss on the disposal of those shares, they can claim to set off that loss against income rather than against capital gains.

Section 250 ITA 2007 permits EIS income tax relief where the subscription was made by a nominee on behalf of the individual, or where the subscription was made on behalf of joint owners. In the latter case the income tax relief is divided equally between the joint owners.

Where EIS income tax relief was not attributable to the shares there is no equivalent legislation to extend relief to subscriptions by nominees or joint owners. Previously, we took the view that share loss relief for such subscriptions was available only where an individual personally subscribed for shares as a sole subscriber. We did not consider that relief was available where the subscription was made in joint names, for example by a married couple. Nor did we accept relief where the subscription was by a nominee on behalf of a beneficial owner.

Change of practice

We have reconsidered our practice on share loss relief for shares to which EIS income tax relief is not attributable. We will now accept claims to relief for losses on the disposal of qualifying shares where the subscription is made in joint names or through a nominee.

The proportion of the capital loss to be attributed to each joint owner needs to be determined as a question of fact, typically based on each owner’s contribution to the cost of the shares.

We are not changing our practice on share loss relief for shares to which EIS income tax relief is attributable. Share loss relief was already available for such shares subscribed for in joint names or through a nominee.


An individual who wants to claim share loss relief must do so within one year from the normal self assessment filing date for the year in which the loss occurs. So a claim for a loss made in 2010-11 must be made by 31 January 2013.

This means that claims can still be made for share loss relief in respect of joint subscriptions or subscriptions through nominees for 2008-09 and later years. Claims for 2008-09 must be made by 31 January 2011.

Claims to share loss relief are usually made in a self assessment return. Where a claim can now be made because of this change of practice it can be included in a self assessment return that has not yet been submitted. Or returns that have already been submitted but are within the time limit for amendment may be amended.

In addition where there is an open enquiry into an existing claim to share loss relief for any tax year, including years before 2008-09, that claim can be settled in accordance with this change of practice.

Further information

We will update the guidance in the Venture Capital Manual at VCM45000+ to reflect the new practice.

Please send any enquiries about this brief to:

Alan Welsby
HM Revenue &Customs
Charity, Assets & Residence
Capital Gains Technical Group
Royal House
Princes Gate
2-6 Homer Road
West Midlands
B91 3WG

Email: Alan Welsby

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© Crown Copyright 2010.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs

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Article Published/Sorted/Amended on Scopulus 2010-10-18 13:53:43 in Tax Articles

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