Last updated: 14 October 2026
Can you set a loss on shares against your Personal Allowance?
Usually not. A loss on selling shares is a capital loss, and capital losses can only be set against capital gains, not against salary or other income covered by your Personal Allowance. Unused losses carry forward to reduce future gains. The main exception is share loss relief: if you subscribed for new shares in a qualifying unlisted trading company, such as under the EIS or SEIS, a loss can be set against your income instead.
How capital losses on shares work
| Type of shares | Relief for a loss |
| Listed shares (e.g. FTSE company) | Against gains in the same year, then carried forward |
| Shares in an ISA | No relief, as gains and losses are ignored |
| Subscribed shares in an unlisted trading company | Choice: capital loss or share loss relief against income |
| EIS or SEIS shares | Share loss relief against income, net of income tax relief already given |
| Shares that have become worthless | Negligible value claim, treated as sold for nil |
Using capital losses
Losses in the same tax year are set against your gains before the £3,000 annual exempt amount, which can waste some of the exemption. Brought-forward losses are used only to bring gains down to £3,000, so the exemption is protected. You must report a loss to HMRC within 4 years of the end of the tax year in which it arose, or you lose it.
Example
In 2026/27, Imran sells listed shares at a £5,000 loss and has no other gains. He has a salary of £45,000. He can’t set the loss against his salary. He reports the loss on his Self Assessment return. In 2027/28 he sells a fund at a £9,000 gain. To bring that gain down to the £3,000 exempt amount he would need £6,000 of losses, but he only has £5,000. He uses all of it, leaving a £4,000 gain. £3,000 is exempt and £1,000 is taxable.
Share loss relief against income
If you subscribed for shares in a qualifying unlisted trading company and they become worthless, you can claim relief against your income in the year of the loss or the previous year. This can reduce income tax at 40% or 45%, which is often more valuable than a capital loss. Relief is capped at the higher of £50,000 or 25% of your adjusted total income, except for EIS and SEIS shares.
Negligible value claims
If a company fails and its shares are worthless, you can make a negligible value claim, treating the shares as sold and reacquired for nil. You can backdate the claim up to 2 years before the tax year in which you make it, if the shares were already worthless then.
Frequently asked questions
Can I offset share losses against rental income?
No, only qualifying share loss relief applies to income.
Do losses on crypto count?
Yes, as capital losses, on the same rules.
Can I sell and buy back to crystallise a loss?
Buying back within 30 days matches the sale with the new purchase.
Do I need to file a return to claim?
Yes, or write to HMRC.
Related: the figures used to calculate CGT and CGT on a jointly owned property.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with tax relief for losses on shares. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
