In this instance, I have a client who has made a substantial capital loss on a disposal of limited company shares.

The company was trading and owned a 50% interest in a trading subsidiary, but it was not an enterprise investment scheme (EIS) company. Can he use this capital loss against income?

Normally where an individual disposes of shares at a loss, the capital loss is set against gains of the same tax year or carried forward for use against future capital gains.

Legislation commencing at Income Tax Act 2007 (ITA) section 131, however, in certain situations allows the capital loss to be set against income of the individual for the current and/or previous tax year.