A taxpayer will set capital losses against capital gains, losses must be set off against capital gains in the same tax year. You can offset capital losses in the same tax year in the most beneficial way. Capital losses on qualifying trading company shares, can be used as either capital losses or set against net income of the current or preceding year. If you have excess losses, they can be carried forward and set against gains in future years.
Losses carried forward – if a taxpayer has losses exceeding gains, the annual exempt amount will be lost and the excess loss is carried forward to offset against future gains, the current year will show nil in the computation. In future years the annual exempt amount is deducted before relief is given for capital losses brought forward. Capital losses brought forward are used in the most beneficial matter if there are gains charged to tax at different rates.