VCM46100 - VC loss relief: general: amount eligible for relief: rebasing

ICTA88/S574 & TCGA92/S35

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

[#] 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.