CG13125 - Introduction and computation: occasions of charge: assets lost/destroyed/negligible value: negligible value

The content in this manual covers a much higher level of detail compared to say a Helpsheet. If you are looking for an introduction to the main conditions for making a negligible value claim for a particular year, please see the Negligible value claims and Income Tax losses ondisposal of shares (Self Assessment helpsheet HS286) on GOV.UK and select the year you are considering.

 

S24(2) TCGA92

Here we are looking at the deemed loss of an asset. Under s24(1A) TCGA92, the owner of an asset may make a negligible value claim to HMRC (see CG13135) if either condition A or B is met.

Under s24(1B) TCGA92, condition A is that the asset has BECOME of negligible value while owned by the claimant.

Under s24(1C) TCGA92, condition B is that:

  • the claimant acquired the asset in a transaction to which one of the no gain/no loss provisions in s35(3)(d) TCGA92 applied (see CG22000c), and
  • the asset was of negligible value at the time of the disposal by which the claimant acquired the asset, and
  • between the time when the asset BECAME of negligible value and the disposal by which the claimant acquired the asset, each other disposal (if any) of the asset was a transaction to which one of the no gain/no loss provisions in s35(3)(d) TCGA92 applied.

There is no requirement to make a claim within a specified time of the asset having become of negligible value.

S24(1A) TCGA92 says that a negligible value claim may be made by the owner of an asset. This means the asset must still exist when the negligible value claim is made. If the asset has ceased to exist then the negligible value claim will not succeed. Instead there will have been an actual disposal under s24(1) TCGA92 (see CG13120).

Meaning of ‘negligible’

'Negligible' is not defined in TCGA92. We take the view that it means 'worth next to nothing'.

The asset that is the subject of the claim needs to be of negligible value at the date of the claim and at the date of the deemed disposal and reacquisition (if different) (see CG13130).

For guidance on the valuation of shares, see CG13140 and CG13145. For guidance on the valuation of all other assets see CG16200c onwards.

Become/became of negligible value

S24(1B) TCGA92 requires the claimant to show that the asset has BECOME of negligible value. If the asset was already of negligible value when it was acquired by the claimant, it cannot be said to have become of negligible value. In such cases, the tests in s24(1B) TCGA92 will not be satisfied and there is no valid claim.

S24(1C) includes a similar requirement, except that the claimant needs to show that the asset BECAME of negligible value while held by a person other than the claimant. Every disposal of the asset subsequent to the asset becoming of negligible value must be by way of a no gain/no loss disposal, including the disposal of the asset to the claimant.

Effect of a successful negligible value claim

A successful negligible value claim results in a deemed disposal of the asset that is the subject of the claim, with the asset immediately reacquired for the amount specified in the claim. It will still be necessary to give notice of any loss arising from the deemed disposal in order for the loss to be an allowable loss for the purposes of s16(2A) TCGA92. The allowable loss accrues from that deemed disposal rather than from the negligible value claim itself. S16(2A) TCGA92 applies to the allowable loss as normal (see CG15800P).

If you receive a claim for negligible value in respect of