Capital losses refer to the losses incurred by an individual or business when they sell a capital asset, such as property, stocks, or shares, for less than its original purchase price. Capital losses can be offset against capital gains made in the same tax year, which can help to reduce the amount of tax that is owed.

In the UK, individuals and businesses can use capital losses to offset any capital gains they have made in the same tax year, as well as any unused losses from previous tax years. If an individual or business has a net capital loss for the tax year, they can carry forward the unused amount and offset it against any future capital gains.

It's important to note that there are different rules for offsetting capital losses depending on the type of asset that has been sold. For example, losses from the sale of shares can only be offset against gains from the sale of other shares, and not against gains from the sale of other assets. In addition, losses from the sale of a personal residence or main home are not generally allowed to be offset against capital gains.

To claim a capital loss, individuals and businesses must report it to HM Revenue and Customs (HMRC) by including it on their tax return. It's important to keep accurate records of the sale and purchase of assets, as well as any related expenses, in order to calculate the correct amount of loss. It's also a good idea to seek advice from a tax professional to ensure that all the relevant rules and regulations are being followed.