A negligible value claim lets you crystallise a capital loss on an asset that has become worthless while you still own it, without having to sell it. Under section 24(2) of the Taxation of Chargeable Gains Act 1992 you are treated as if you had sold the asset and immediately bought it back for its negligible value. This turns a paper loss, often on shares in a failed company, into an allowable loss you can actually use against your gains.

When a company you invested in collapses, your shares can end up worth next to nothing long before anyone formally winds it up or strikes it off. Without a special rule you would be stuck holding a worthless asset with no disposal and therefore no loss to claim. A negligible value claim fixes that. This guide explains what the claim is, the conditions you must meet, whether you can backdate it, and how the position changes for shares that qualified for the venture capital schemes.

What is a negligible value claim?

A negligible value claim is a way of realising a capital loss on an asset you still hold. Normally you can only make an allowable loss when you actually dispose of something. Section 24(2) TCGA 1992 creates an exception. If you own an asset that has become of negligible value, you can claim to be treated as though you had sold it and reacquired it at the value stated in your claim, usually a token amount. That deemed disposal produces an allowable capital loss, even though nothing has actually been sold and you keep ownership.

HMRC treats “negligible” as worth next to nothing. The legislation gives no fixed figure, so the test is whether the asset is now practically worthless rather than simply worth less than you paid.

What are the conditions?

Three conditions must all be met before a claim can succeed:

  • You must own the asset at the time you make the claim. If the shares have already been cancelled or the company has been dissolved, the asset no longer exists, so there is an actual disposal and a claim is neither needed nor possible.
  • The asset must have become of negligible value. A fall in value on its own is not enough. The asset has to be worth next to nothing, not merely down on what you paid.
  • The asset must have been worth more than a negligible amount at some point while you owned it. You cannot claim on something that was already worthless when you acquired it.

Because the loss is a capital loss, it is set against capital gains in the normal way and follows the usual rules. It is worth checking the current Capital Gains Tax rates and your annual exempt amount so you understand how much a loss is actually worth to you.

Can you backdate the claim?

Yes, within limits. As well as the deemed disposal taking effect on the date of your claim, you can ask for it to be treated as happening at an earlier time. Two conditions apply. The asset must already have been of negligible value at that earlier date, and that earlier date cannot be more than two years before the beginning of the tax year in which you make the claim.

Backdating can be valuable. It may let the loss fall into a year when you had large gains to cover, or help with the timing of other reliefs. If you are unsure which year gives the best outcome, our wider accountancy and tax guide covers how losses and gains interact across tax years.

What about EIS or SEIS shares?

Shares that qualified for the Enterprise Investment Scheme or the Seed Enterprise Investment Scheme get more generous treatment. A loss on such shares, whether from an actual sale at a loss or from a negligible value claim, does not have to be locked away against capital gains. Under share loss relief in section 131 of the Income Tax Act 2007 you can instead choose to set the allowable loss against your income for the year of the loss or the previous year.

Because Income Tax rates are often higher than Capital Gains Tax rates, relieving a loss against income can be far more useful than relieving it against gains. The loss is still worked out in the normal capital way, but the relief is claimed against income. This route is one of the reasons the venture capital schemes are attractive, since it softens the blow when an early stage company fails.

How do you make the claim?

You make a negligible value claim either on your Self Assessment tax return or separately in writing to HMRC. The claim should identify the asset, state the value you are claiming it has fallen to, and give the date from which you want the deemed disposal to take effect if you are backdating it.

Keep evidence that the asset really had become of negligible value at the date you are claiming, such as accounts, insolvency notices or correspondence showing the company had no realistic worth. Remember that claiming the deemed loss and notifying HMRC of the allowable loss are separate steps, though you can do both in the same letter or return. If the loss is against a business asset you are also disposing of, our guide to Business Asset Disposal Relief explains how gains on qualifying sales are taxed.

Getting the claim right

Negligible value claims turn on valuation and timing, and both are areas HMRC may question, especially where a loss is set against income under share loss relief. A claim that fails on the ownership condition, or a backdated date that cannot be supported, can be refused years later. Careful record keeping and the right year of claim make the difference.

If HMRC opens an enquiry into a loss claim, professional fees can mount quickly. Solar Protect tax investigation insurance covers up to £100,000 of your accountant’s fees with no excess, so you can defend a properly made claim without worrying about the cost. Get a quote.

Reviewed by Matthew Bartlett, Director, Solar Protect. This guide is general information, not personalised tax or financial advice. Figures are correct for the 2025/26 and 2026/27 UK tax years at the time of writing.