Are there any tax implications when I lose money to a scam?
In some countries and circumstances, scam losses may be deductible for tax purposes — particularly for business taxpayers or investors — but the rules are complex and jurisdiction-specific; always seek advice from a qualified tax professional.
Last reviewed: 10 June 2026
Explanation
Tax treatment of scam losses varies significantly by country and by the nature of the loss. In the UK, losses from investment fraud may sometimes qualify for capital loss relief for income tax purposes, depending on whether the investment qualified as a 'negligible value claim' asset. HMRC has specific guidance on investment losses in fraudulent schemes.
In the US, the IRS has specific rules on theft loss deductions following the 2017 Tax Cuts and Jobs Act, which significantly restricted personal theft loss deductions. Business theft losses retain more deductibility. Ponzi scheme victims have specific guidance under IRS Revenue Procedure 2009-20.
For most individuals with consumer-type losses, the tax implications are likely minimal or non-existent. The most relevant scenarios involve significant investment losses, business losses, or losses with a documented capital nature.
This is general information only and does not constitute tax advice. Tax rules change regularly and the application to a specific situation requires professional assessment. Consult a qualified tax adviser or accountant for your circumstances.
Common red flags
- You received a tax form or payment from an alleged 'tax refund' as part of a scam — do not report this as income
- You are unsure whether a recovery payment you received from a fraud case should be declared
What to do now
- Consult a qualified accountant or tax adviser about whether your loss has any tax deductibility
- Gather all financial records relating to the scam loss in case they are needed for tax purposes
- If you received any recovery payments, ask your tax adviser how to treat these
- Contact HMRC or your national tax authority's helpline for general guidance
Frequently asked questions
Do I need to declare scam losses on my self-assessment tax return?
In most cases, consumer fraud losses are not declared on tax returns as they do not constitute a recognised deductible loss for income tax purposes. However, if you had significant investment losses or business-related losses, a tax adviser should assess whether any deduction or relief is available.
What if the scammer sent me a 'partial refund' as part of a secondary scam?
Partial refunds offered by scammers are often part of an overpayment scam — they send more than the 'refund' via cheque or transfer and ask you to return the excess. Do not accept these. Report the approach to your fraud authority. Any payment received as part of a scam operation is not genuine income.