Do I have to use losses from this year even if it wastes my allowance?

Yes. Current-year losses must be set against current-year gains in full, with no option to defer. Any excess above those gains carries forward to future years.

Why does the calculator ask for two loss figures?

Because the rules differ. Current-year losses come off in full; brought-forward losses are used only down to the exempt amount, leaving the balance intact. Merging them into one figure overstates the tax and understates what you have left.

How long do I have to claim a loss?

Four years from the end of the tax year in which the loss arose. Claim it in the year it happens even if you have no gains, because the claim is what keeps it alive.

Can I carry losses back to an earlier year?

Not in the ordinary course. Capital losses generally go forward, not back. There are narrow exceptions, notably around losses in the year of death, which are outside what this calculator covers.

Capital Losses: This Year's and Last Year's Are Not the Same Thing

Capital losses reduce the gains you pay tax on, but the rules depend on when the loss arose. Losses made in the same tax year must be set against that year's gains in full, even when doing so wastes your tax-free exempt amount. Losses brought forward from earlier years are used only to bring your gains down to the exempt amount and no further, so the allowance survives and the unused balance carries on. Treating both the same way costs money in two directions at once.

The Capital Gains Tax calculator asks for the two kinds separately, and shows how much loss you still have left to carry forward.

Current-Year Losses: No Choice, Even When It Hurts

A loss realised in the same tax year as your gains must be offset against them. There is no option to hold it back for a better year. If your gains were already below the exempt amount, the loss is absorbed against gains that were not going to be taxed anyway, and the benefit is simply lost. This is worth knowing before you sell: crystallising a loss in a year when you have small gains achieves nothing, while the same disposal in a year of large gains is valuable. Any excess beyond the current year's gains is not wasted, though - it carries forward.

Brought-Forward Losses: Used Sparingly, and Deliberately So

Losses from earlier years work differently, and the difference protects you. They are only brought into play if your gains, after current-year losses, still exceed the exempt amount - and then only enough is used to reach that amount. The rest stays available indefinitely. The rule exists precisely so you are not forced to burn banked losses against gains the exempt amount would have covered for free. A calculator that lumps both kinds into one input will use more of your carried-forward losses than the rules require, quietly reporting a smaller balance for future years than you actually have.

The Four-Year Claim Deadline People Miss

A loss does not become usable simply because it happened. It has to be claimed, and the window closes four years after the end of the tax year in which the loss arose. Miss that and the loss is gone regardless of how large it was. You do not have to be registered for Self Assessment to claim - if you have never made a gain you can write to HMRC instead. The practical advice is to report losses in the year they occur even if you have no gains to set them against, because the claim is what preserves them.

Losses That Do Not Count

Not every fall in value is an allowable loss. The asset generally has to be one that would have produced a taxable gain had it risen instead, which rules out things exempt from Capital Gains Tax in the first place. Losses on disposals to connected persons are ring-fenced and can normally only be set against gains from the same person. And a loss only exists once the asset is actually disposed of - an investment that has fallen but that you still hold has produced nothing to claim. Where an asset has become genuinely worthless there is a separate route to treat it as disposed of.