Negligible Value Claim

Claim tax relief on negligible value shares

A guide on how to claim upto 40% of your loss
by Keith Silman of Fixed Fee Accountants

What is a negligible value claim?

If you own an asset which has become worth next to nothing (ie has a negligible value), you can make a claim to offset the loss against your other income. If you are a higher rate tax payer, you may receive a tax refund of upto 40% of the loss.

A negligible value claim enables you to set a capital loss against your income (or against other capital gains if you have them) for earlier years and claim a tax refund.

Many negligible value claims are made by shareholder directors whose company has failed. Their claim is to offset the loss on the shares in their company against their directors' wages for earlier tax years. Depending upon the tax paid in the earlier year, they can receive a tax refund of upto 40% of the loss in the value of their shares.




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HRBS can help you reclaim higher rate tax already paid.

If you were a higher rate tax payer in any of the two previous tax years you can make a negligible value claim which treats the loss as if it was made in either of those two years.

For example, if your asset became worthless in September 2007, which was in the 2007/2008 tax year you can make a negligible value claim as if it became worthless in either the 2005/06, 2006/07 or 2007/08 tax years. The claim can be made in your 2007/2008 tax return and must be made by 31 January 2009 or, if you want to claim a tax refund for 2005/2006, we can make it in writing.

If your asset became worthless in May 2008, which is in the 2008/2009 tax year you can make a claim as if it became worthless in either the 2006/07, 2007/08 or 2008/09 tax years.

For assets which become worthless in the tax year 2008/2009 (6 April 2008 to 5 April 2009) a negligible value claim can be made in writing to HM Revenue & Customs, or in your 2008/2009 tax return from 5 April 2009.




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How to claim your tax refund

Firstly you have to calculate the amount of loss you wish to claim. You can do this yourself, or use a tax advisor. At HRBS Accountants, we can prepare and make your claim for you, or, if you prefer, we can check over your claim before you submit it to HM Revenue & Customs.

Your claim to offset the capital loss gainst income for 2005/2006 must be made in writing and cannot be made on your 2007/2008 tax return.

Call HRBS on 01226 379000 for more information.


How you calculate your capital loss

If you are making your tax refund claim due to your shares becoming worthless (ie of negligible value) you can only claim if, when you disposed of the shares (or on the date you are claiming they became worthless):

The terms "trading company" and "eligible trading company" are explained in HM Revenue & Customs help sheet HS286. A pdf is available here.




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How long does a negligible value claim take?

If you are making your negligible value claim in writing, depending upon the complexity of your claim, you may receive your tax refund in 6 to 8 weeks.



I want to make a negligible value claim ... can you help?

Yes, AT HRBS we would be pleased to make the claim on your behalf. We will need you to:

We will liase with HM Revenue & Customs on your behalf and keep you informed of the progress of your claim.

For further information, please call 01226 379000 or email

© 2008 , High Royd Business Services Limited, PO Box 4074, Sheffield, S36 7WU

Tel: 01226 379000,



relevant web sites

Tax Bookshop


Using a Company to Save Tax


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