Syllabus A2. Chargeable gains A2e. Disposal of movable and immovable property

A2eiv. Negligible Value Claims

Syllabus A2eiv)

Advise on the tax effect of making negligible value claims

Assets falling in value

Negligible Value Claim

If an asset is acquired at market value and then later on the market value of the asset is lower than when acquired, it is said that the asset has fallen in value.

If the asset which has fallen in value is disposed of then a capital loss would be realised. 

If it is evident that an asset has fallen in value (e.g. as a result of a company going into liquidation) then the taxpayer can claim relief for a fall in value of the asset and will be treated as if the asset has been disposed of for market value. 

A capital loss is then treated as being realised even although the taxpayer has not actually disposed of the asset. This loss can then be offset against total income of the current or previous year - it is not restricted to being offset against capital gains. You cannot restrict the loss to preserve your personal allowance.


Bob has 5,000 shares in Willis Ltd, an unquoted company based in the UK. 

He subscribed for these shares in August 2004, paying £3 per share. On 1 December 2018, Bob received a letter informing him that the company had gone into liquidation. 

As a result, his shares were almost worthless. 

The liquidators dealing with the company estimated that on the liquidation of the company, he would receive no more than 10p per share for his shareholding.

Bob has taxable income of £54,000.

If Bob makes a negligible value claim, what capital loss will he realise and how can he obtain loss relief for this?

  • Solution

    Bob can make a negligible value claim as at 1 December 2018. 

    This will give rise to a capital loss of £14,500 (£500 – £15,000) which will be deemed to arise in the year 2018/19. 

    By doing so, his taxable income for that year will be reduced to £39,500 (54,000 – 14,500). 

    As the capital loss is realised on the disposal of unquoted shares, this allows the loss to be relieved against the taxpayer total income for the year in which the loss arose, and/or against the total income of the previous year.

    This will give Bob income tax relief at 40% saving income tax of £5,800 (40% x 14,500). 

    The alternative option is the carry the loss forward against capital gains of future years, which will give him maximum relief at 20%.