Last updated: 14 October 2026
What’s the best way to get tax relief when a company you invested in fails?
Make a negligible value claim as soon as the shares are worthless. If the company has gone into administration or liquidation and the shares are effectively worthless, you can claim that they’ve become of negligible value. This treats you as selling the shares and buying them back for nothing, so you get a capital loss straight away, without waiting for the company to be dissolved. If the shares qualify, you may then set the loss against your income instead of gains, and carry it back a year.
How a negligible value claim works
| Step | Detail |
| Shares become worthless | HMRC keeps a list of negligible value quoted shares |
| Make the claim | In your tax return or by letter to HMRC |
| Choose the date | Can be backdated up to 2 tax years if the shares were worthless then |
| Loss arises | Equal to what you paid for the shares |
Share loss relief against income
You can set the loss against your income in the year of the loss or the previous year if:
- you subscribed for new shares, rather than buying existing shares
- the company is an unquoted trading company, or had EIS or SEIS relief
- the company met the trading conditions when the shares were issued
This can save tax at 40% or 45%, rather than CGT at 18% or 24%. It’s capped at £50,000 a year, or 25% of income if higher, unless the shares had EIS or SEIS relief.
Example
Harriet subscribed £30,000 for shares in a start-up in 2021. It goes into administration in October 2026. She makes a negligible value claim in her 2026/27 return. As she subscribed for new shares in an unquoted trading company, she sets the £30,000 loss against her 2025/26 income, on which she paid 40% tax. That gives a £12,000 repayment.
If the shares had EIS relief
The loss is reduced by the EIS income tax relief you received. A £30,000 EIS investment with £9,000 relief gives a £21,000 loss, which can be set against income at your marginal rate.
Time limits
- Negligible value claims can be backdated up to 2 years before the start of the tax year of the claim
- Income loss relief claims must be made within 12 months of 31 January after the tax year of the loss
Records to keep
- Share certificates and subscription agreements
- Evidence of administration or liquidation
- Any EIS3 or SEIS3 certificates
Proving the shares are worthless
HMRC needs to accept that the shares have negligible value at the date you choose. Evidence includes the administrator’s or liquidator’s reports showing shareholders will get nothing back. Keep a copy with your tax records in case HMRC asks for it later.
Frequently asked questions
What if I bought shares from someone else?
You can only set the loss against gains, not income.
Can I wait until the company is dissolved?
Yes, but a negligible value claim gets relief earlier.
Does it apply to quoted shares?
Yes, but only against gains.
What if the company recovers?
Your new base cost is nil, so any later sale is a gain.
Related: offsetting share losses, reliefs to reduce gains on shares and Business Asset Disposal Relief update.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with tax relief for investment losses. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
