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Tax Insider Tip: Make A Negligible Value Claim For Worthless Assets

13th Jul 2015
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If you own an asset that has become worthless you can make a claim to treat the asset as if you had sold it and immediately reacquired it at the time of the claim for its value at that time.

The claim, known as a negligible value claim, enables relief to be given for the loss in value of the asset.

The loss is treated as arising in the year in which the claim is made, or at a time specified in the claim in the two preceding tax years during which time the conditions for the claim were met.

Example:
John purchased a painting which cost £10,000. In June 2014, the painting is found to be a worthless fake.

John makes a negligible value claim for 2014/15 for the loss on the painting of £10,000. The loss can be set against capital gains for 2014/15 or carried forward against future capital gains if he has not made any capital gains in 2014/15. Making the claim could save John capital gains tax of £2,800 if he is a higher rate taxpayer.

 

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

Click here to receive a free copy of this tax saving guide today!

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