Negligible Value Claim (NVC) in SEIS shares

When assets become of negligible value in TP’s (taxpayer) ownership, TP may choose to make a negligible value claim. TP is treated as though he had disposed of the asset and immediately reacquired it at the time the claim is made, for an amount equal to the value which is specified in the claim. 

This is most commonly applied to shares where the company goes into liquidation.¹

Claim should be made via a tax return. Date of claim is date of submission of tax return.

Conditions for making a claim are:

• you must still own the asset when you make the claim²
• the asset must have become of negligible value while you owned it.

Set capital loss against income

Usually, capital losses are not allowed to be set-off against income, as capital gains are taxed at a lower rate than income tax.

But if certain conditions³ are met NVC loss can be set off against income.

Limit on losses

For losses made in 2013 to 2014 onwards, the total of all Income Tax losses which can be claimed against a year’s income is limited to £50,000, or 25% of that income if greater.

This limit does not apply to losses on shares to which EIS or SEIS relief is attributable. Helpsheet 204 Limit on Income Tax reliefs (2022) explains which reliefs are included in the limit.

Tax return

1. Provide details of negligible value claim in box 54, ‘Any other information’⁴, on SA108 pages and attach computations with your tax return.

2. Ensure loss is included in boxes 7, 19, 27 or 35 of the SA 108, as applicable, and use code ‘NVC’ in boxes 8, 20, 28 or 36, as applicable, and provide an accompanying computation.

3. To set-off capital loss against income complete Box 41 on SA108.

4. Complete box 42 for losses in shares of EIS or SEIS.

Sample Computation ^{5 and 6}

Deemed disposal proceeds                                                                      £Nil

Allowable costs:

Actual Purchase cost                     £15,000

Income Tax relief re SEIS               £1,000⁷                                      £14,000              

Allowable Loss  eligible to be set-off against income                      £14,000

Notes:

1. Tolley Exam Training 30.4
2. See Example 1 in HS286.
3. See HS286 for these conditions.
4. Information to include in this box is given in ` How and when to claim the relief` section of HS286.
5. See Example 4 in HS286.
6. Good computation examples given in Tolley Tax computations 227.2 and 15.5
7. Assumed less than 50% relief claimed in the year of investment due to insufficient taxable income.