If the shares on which an allowable loss accrues were held on 31 March 1982 the normal CG rules apply and the loss may be computed by reference to the 31 March 1982 value of the shares if a valid rebasing election under TCGA92/S35 (5) has been made, see CG16700 onwards.
Example
In January 1980 an investor subscribes for 100 shares in B Ltd
at £1 per share. B Ltd is a qualifying trading company, which
does well for some years before going into decline so that the
shares became worth nothing during 1999.
In January 2000 the investor makes a negligible value claim
under TCGA92/S24 (2), see CG13121 onwards. The investor has made an
election under TCGA92/S35 (5) so that the allowable loss on the
deemed disposal of the shares resulting from the negligible value
claim is based on the value of the shares at 31 March 1982 - not
what they cost. Shares Valuation agree that the market value of the
100 shares held at 31 March 1982 was £4,000.
The deemed disposal of the shares in January 2000 for their
negligible value results in an allowable loss, as follows:
Successions: chart
| Deemed disposal proceeds |
Nil |
| Value of shares at 31 March 1982 [#] |
(£4,000) |
| Allowable loss 1999-2000 |
(£4,000) |
[#] For disposals on or after 30 November 1993 indexation
allowance cannot create or enhance an allowable loss.
The taxpayer may claim VC loss relief in respect of the
allowable loss of £4,000.
