Exempt chattels and wasting assets.
A chattel is a piece of tangible, movable property (something that you can touch and move).
Your personal possessions will normally be chattels.
For example, items of household furniture, paintings, cars, items of plant and machinery fixed to a building.
Some chattels are exempt and some are chargeable to capital gains tax.
A wasting chattel is exempt from capital gains tax.
A wasting chattel is one with a life of 50 years or less.
For example, racehorses, boats.
Exception to the exemption of wasting chattels:
Plant and machinery (with a life of less than 50 years) on which capital allowances have been claimed are treated as non wasting chattels.
A capital gain needs to be calculated on their disposal, but a capital loss will not be allowable on their disposal.
It is possible that they are exempt under the non-wasting chattel exemption (being bought and sold for less than or equal to £6,000).
Non wasting chattel capital gains calculation:
|<=£6,000||>£6,000||Normal calculation but the gain is restricted to 5/3*(Gross proceeds-£6,000)|
|>£6,000||<£6,000||Deemed gross proceeds = £6,000|
Maria sold the following assets in December:
An antique table which had cost £3,000 and was sold for £5,000
A painting which had cost £2,000 and was sold for £10,000
An antique vase which had cost £8,000 and was sold for £3,000
A set of china which had cost £7,000 and was sold for £8,000.
The table is exempt as it was bought and sold for less than £6,000
Capital gain £8,000
Maximum gain assessable = 5/3*(£10,000-£6,000) = £6,667
Deemed proceeds £6,000
Capital loss (£2,000)
The proceeds are deemed to be £6,000 as it was bought for more than £6,000 and sold for less than £6,000.
Capital gain £1,000
This is the normal calculation as the set of china had been bought and sold for more than £6,000.