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The relief must be claimed within one year of the 31 January after the year in which the claim is made.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.
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).
It must be shown that the goodwill of the business as a whole has next to no value at the date of the claim.
A negligible value claim cannot be made once the business has ceased to trade because, in effect, the goodwill ceases on the permanent cessation of the business to which it relates and therefore the taxpayer no longer owns the goodwill.
When a taxpayer makes a negligible value claim, they are treated as if they had sold the asset and immediately reacquired it for its value at the time the claim is made.
This results in a capital loss that the taxpayer can set against capital gains and, in some cases, income.
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.