For a gain or loss to be within the scope of tax on chargeable gains, there must be a chargeable disposal of a chargeable asset by a chargeable person. See C1.307, C1.301 and C1.102 respectively. This article summarises the tax treatment where an asset becomes of negligible value.
Individuals, trustees and personal representatives are subject to capital gains tax on chargeable gains. Companies are subject to corporation tax on chargeable gains. See C1.102.
For a discussion of the computation of chargeable gains and losses, see C1.105. For the rates of tax that apply to chargeable gains, see C1.107.
Assets becoming of negligible value
The owner of an asset may submit a claim to the effect that the asset has become of negligible value in order to crystallise an allowable loss1. The term 'negligible' is not defined in the legislation, and HMRC previously stated the view that this means 'worth next to nothing'. The Manual guidance has now been updated to remove that definition2.
The key word is that the asset
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