Taxation (UK) · Gains and losses on the disposal of shares and securities

Losses on Shares and Negligible Value Claims

Updated 11 October 2026 · Fact-checked

A negligible value claim lets an individual treat shares that have become practically worthless as sold and reacquired at a chosen date, creating a capital loss. That loss is set against gains. For unquoted trading company shares you subscribed for, you can instead claim share loss relief against total income.

Understand Losses on Shares and Negligible Value Claims

A capital loss on shares normally arises when you sell them for less than you paid. But shares can become worthless without being sold, for example when a company fails. You cannot wait forever for a sale, so tax law allows a negligible value claim.

With the claim, you are treated as having sold the shares and immediately reacquired them for their negligible value. The deemed sale gives you a loss equal to your cost less that tiny value. The claim can set the deemed disposal at a date up to two years before the start of the tax year of the claim, provided the shares were already of negligible value then. The shares must still be owned and be of negligible value at the time you make the claim.

Once you have a capital loss, the normal rules apply. Current-year losses are set against current-year gains in full, even if that takes gains below the annual exempt amount (£3,000). Any loss left over is carried forward. Brought-forward losses are used only to the extent needed to reduce gains to the annual exempt amount, so the exemption is not wasted.

There is a special relief for some individuals. If you originally subscribed for new shares in a qualifying unquoted trading company, you can claim share loss relief and set the loss against your total income instead of gains. The loss must arise from an arm's-length sale, a liquidation, or a negligible value claim. You can use it against income of the year of the loss, the previous year, or both. Buying shares from another shareholder does not qualify.

This income relief is useful when you have no gains or when your income is taxed at 40% or 45%. It counts towards the cap on income tax reliefs, which is the higher of £50,000 or 25% of income, unless otherwise restricted.

Key rules to remember

Negligible value claim loss: Loss = Allowable cost − negligible value at the chosen date; The claim treats you as selling and reacquiring the shares at that value. Your new base cost is the negligible value.
Current-year loss relief: Net gains = Gains − Current-year losses (in full); Current-year losses are not restricted by the annual exempt amount (£3,000).
Brought-forward loss relief: B/f loss used = Net gains − £3,000 (annual exempt amount), limited to the loss available; Use b/f losses only after current-year losses. Leave gains equal to the annual exempt amount.
Share loss relief against income: Relief against total income of the loss year and/or the previous year; Only for individuals who subscribed for shares in a qualifying unquoted trading company. Subject to the cap: the higher of £50,000 or 25% of income.
Time limit for share loss relief claim: 12 months after 31 January following the end of the tax year of the loss; For a 2025/26 loss, the deadline is 31 January 2028.

How to solve Losses on Shares and Negligible Value Claims questions

Work through the facts in this order. It shows which relief applies and keeps the loss arithmetic in the right sequence.

1Identify the loss. Is it an actual disposal, a liquidation, or a negligible value claim? Find the cost and the value at the date of the claim.
2Check the date. For a negligible value claim, the chosen date cannot be earlier than two years before the start of the tax year of the claim, and the shares must have been of negligible value then.
3Decide whether share loss relief is possible. You need an individual who subscribed for the shares in a qualifying unquoted trading company. Purchased shares and quoted shares fail.
4Compute the capital loss: proceeds (or negligible value) less allowable cost.
5If using capital loss relief, set the loss against current-year gains in full. Then deduct the annual exempt amount (£3,000), and only then use brought-forward losses to the extent needed.
6If using share loss relief, decide which year or years to claim. Compare the tax rates on income in the loss year and the previous year. Allow for the personal allowance and the cap on reliefs.
7State the loss carried forward, the taxable gain, and the claim deadline.

Quickest way: Three-question triage for share losses

When to use it: Use this on any objective test question or short scenario about a loss on shares.

Ask: did the investor subscribe for the shares in an unquoted trading company? If no, only a capital loss is possible.
Ask: is the shareholder claiming negligible value? If yes, the loss arises at the claim date, or a chosen earlier date within two years before the start of the tax year of claim.
For gains: current-year losses in full, then AEA, then b/f losses only to bring gains down to £3,000. For income: pick the year with the highest tax rate, and check the cap.

Common mistakes in Losses on Shares and Negligible Value Claims

Restricting current-year losses so the annual exempt amount is kept.
Students mix up the rule for current-year losses with the rule for brought-forward losses.
Fix: Current-year losses go in full against current-year gains. Only b/f losses are limited to reduce gains to £3,000.
Using brought-forward losses to reduce gains to zero.
It seems efficient to remove all tax, but it wastes the annual exempt amount.
Fix: Use b/f losses only to leave gains equal to the AEA. Carry the rest forward.
Allowing share loss relief for purchased shares or quoted shares.
Students remember that unquoted trading companies qualify but forget the subscription condition.
Fix: Check that the individual subscribed for new shares and that the company is a qualifying unquoted trading company.
Missing the cap on income tax reliefs.
The cap is learned as a separate topic and forgotten when doing loss questions.
Fix: Compare the claim with the higher of £50,000 or 25% of income. Restrict relief if the claim is greater.
Treating a negligible value claim as a disposal for cash.
Students forget the shares are still owned after the claim.
Fix: State that the shares are treated as sold and reacquired at the negligible value. That value becomes the new base cost.
Getting the claim deadline wrong.
The deadline looks like the self-assessment deadline.
Fix: Share loss relief must be claimed within 12 months after 31 January following the tax year of the loss.

Worked examples

Example 1

Rahul has chargeable gains of £18,000 in 2025/26. He also makes a valid negligible value claim creating a capital loss of £11,000 in 2025/26. He has unused capital losses of £6,000 brought forward. Calculate his taxable gain and the loss carried forward.

Show the solution

Gains £18,000 less the current-year loss £11,000 = net gains £7,000. The current-year loss is used in full.
The annual exempt amount is £3,000. Brought-forward losses are used only to reduce gains to £3,000.
B/f loss used = £7,000 − £3,000 = £4,000.
Gains after b/f losses = £3,000. The annual exempt amount of £3,000 covers it. Taxable gain = £0.
Loss carried forward = £6,000 − £4,000 = £2,000.

Answer: Taxable gain £0. Losses of £2,000 are carried forward, and the annual exempt amount is fully used.

Example 2

Priya subscribed for 40,000 £1 shares in an unquoted trading company (qualifying for relief). The company went into liquidation in 2025/26 and the shares are worthless, so she has a loss of £40,000. Her non-savings, non-dividend income was £30,000 in 2025/26 and £60,000 in 2024/25. She has no gains. Assume a personal allowance of £12,570 and that no personal allowance reduction applies. Which share loss relief claim is better, and what is the tax saved by claiming against 2024/25 income? By when must she claim?

Show the solution

The loss arises from a liquidation of shares she subscribed for, so share loss relief against income is available.
Cap check: the higher of £50,000 or 25% of income is at least £50,000. The £40,000 claim is within the cap.
Claim against 2025/26 income: income of £30,000 is wiped out. The tax saved is (£30,000 − £12,570) × 20% = £3,486. Part of the loss and the personal allowance are wasted.
Claim against 2024/25 income: tax before the claim. Taxable income £60,000 − £12,570 = £47,430. Basic rate £37,700 × 20% = £7,540. Higher rate (£47,430 − £37,700) = £9,730 × 40% = £3,892. Total £11,432.
Tax after the claim: income £60,000 − £40,000 = £20,000. Taxable income £20,000 − £12,570 = £7,430 × 20% = £1,486.
Tax saved = £11,432 − £1,486 = £9,946.
The deadline is 12 months after 31 January 2027, which is 31 January 2028.

Answer: Claiming against 2024/25 income is better and saves £9,946, compared with £3,486 for 2025/26. The claim must be made by 31 January 2028.

Exam tips

Read the shares carefully. The words 'subscribed for' and 'unquoted trading company' decide whether income relief is available.
In an objective test, check whether the loss is current-year or brought-forward before applying the AEA rule. This is a common trap.
In constructed-response answers, show each step in order: loss, current-year set-off, AEA, b/f loss, loss carried forward. This earns marks even if one figure is wrong.
When asked to advise, compare tax rates in the loss year and the previous year. Mention the cap on income tax reliefs and the wasted personal allowance.
State the claim date or deadline when the question asks about claims. A single correct date is an easy mark.

Practice questions from Gains and losses on the disposal of shares and securities

Losses on Shares and Negligible Value Claims: frequently asked questions

What is a negligible value claim for shares?

It is a claim that shares you still own have become of negligible value. You are treated as selling and reacquiring them at that value, which creates a capital loss. The loss can be set against gains in the normal way.

Can I claim share loss relief against income for any shares?

No. The relief is for individuals who subscribed for new shares in a qualifying unquoted trading company. Quoted shares and shares bought from another shareholder do not qualify.

Can capital losses on shares be set against income?

Normally no, capital losses are set only against gains. The exception is share loss relief for qualifying subscribed unquoted trading company shares, which is set against total income.

Which year should I claim share loss relief against?

You can claim against income of the loss year, the previous year, or both. Choose the year where income is taxed at the highest rates, and check the cap on income tax reliefs.

How are brought-forward capital losses used?

Use current-year losses first, in full. Brought-forward losses are then used only to reduce gains to the annual exempt amount, £3,000, so that the exemption is not wasted.