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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Introduction and computation: occasions of charge: assets lost/destroyed/negligible value: negligible value

TCGA92/S24(2)

The owner of an asset may make a negligible value claim to HMRC (see CG13135) if either condition A or B is met (section 24(1A)).

Condition A is that the asset has BECOME of negligible value (see below) while owned by the claimant (section 24(1B)).

Condition B is that:

  • the claimant acquired the asset in a transaction to which one of the no gain/no loss provisions in TCGA92/35(3)(d) 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 (see below) 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 section 35(3)(d) applied (section 24(1C)).

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

Section 24(1A) 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 section 24(1) (see CG13120).

Meaning of ‘negligible’

‘Negligible’ is not defined in TCGA 1992.  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).  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

Section 24(1B) 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 section 24(1B) will not be satisfied and there is no valid claim.

Section 24(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.  Assuming that a gain on a disposal of the asset would have been a chargeable gain, then the deemed disposal will give rise to an allowable loss, TCGA92/16(2).  Bear in mind that the allowable loss accrues from that deemed disposal rather than from the negligible value claim itself.  Section 16(2A) will apply to the allowable loss as normal (see CG15813).

If you receive a claim for negligible value in respect of