Backdating capital gains
A list of shares formerly quoted on the London Stock Exchange that have been declared of negligible value by HMRC’s Shares and Valuations Office is updated monthly on the GOV. Negligible value claims can be backdated, as long as these conditions are satisfied: This can be useful if a taxpayer has not made any capital gains in the current tax year but has done in the previous two.
Since the asset must have already become of negligible value at the time to which the claim is being backdated, this will be useful only if the possibility of a negligible value claim was missed at the time of the earlier gain.
To make a negligible value claim, the taxpayer must own the asset at the time the claim is made.
Therefore, in order to make a claim in relation to shares in a company, the company must still be in existence.
If the company stopped trading before the disposal of the shares, the relief is still available if these conditions are met: If the conditions are satisfied and a claim is made, the relief is given by deducting the allowable loss from a taxpayer’s total income before any income tax, such as the personal allowance.
The claim cannot be restricted to preserve any income tax allowances available.
A negligible value claim is also possible on purchased goodwill.
Thus, for negligible value claims made in 2015/16, the claim to set the loss against income must be made on or before 31 January 2018.
An allowable loss may, however, arise under TCGA 1992 s 24(1), whereby the entire loss, destruction, dissipation or extinction of an asset constitutes a disposal of it for the purposes of TCGA 1992.
The disadvantage of this is that such losses cannot be backdated like negligible value claims, so they will only be available to use against gains in the current tax year (or to carry forward for use against future gains).
The claim must state the asset’s value at the time of the claim.
Negligible value is not defined by statute, but HMRC states: ‘An asset is of negligible value if it is worth next to nothing’ (HS286).