Assets of negligible value

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Assets of negligible value
  • Negligible value claim
  • Particular types of asset
  • Deadline for the claim
  • Losses
  • Post-transaction valuation

Generally, a taxpayer can only claim a capital loss in respect of an asset where that asset has been disposed of or has been destroyed completely.

If the asset has simply become worthless (of negligible value), but continues to exist and be held by the taxpayer, there is no capital loss under the normal rules but a claim may be made as described in this guidance note.

TCGA 1992, s 24; CG13125
Negligible value claim

The taxpayer may make a claim under TCGA 1992, s 24(2) for an asset, which he owns at the time of the claim, to be treated as having been sold and immediately reacquired at the value specified in the claim. The amount specified will normally be the market value of the asset and in many instances, that value will be zero.


The reason behind the negligible value claim is to allow a taxpayer to realise losses on assets which he would otherwise be unable to sell because those assets have become worthless during his period of ownership.

Effect of the claim

A capital loss will arise at the date of the deemed disposal. Assuming that the asset is completely worthless, the capital loss will be equal to the original base cost.

TCGA 1992, s 24(2); CG13130

The taxpayer’s base cost of the asset for capital gains tax purposes going forward is nil. Thus, if the value of the asset recovers in the future and the asset is sold, that entire value will be taxed as a gain.

When is the loss effective?

The loss can be treated as a capital loss for the year in which the claim is made. Alternatively, the taxpayer can elect to treat this loss as a current year loss arising in any of the two tax

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