Guidance

Personal possessions and Capital Gains Tax 2023 (HS293)

Updated 6 April 2024

This helpsheet explains how ‘possessions’ (see the next section for an explanation of this term) are treated for Capital Gains Tax (CGT). But it’s only an introduction. If you’re in any doubt about your circumstances you should ask your tax adviser. You can also consult our Capital Gains Tax Manual, which explains the rules in more detail. This helpsheet will help you fill in the ‘Capital Gains Tax summary’ pages of your tax return.

The following guidance includes calculations.

Part 1 Introduction

There are special CGT rules for ‘chattels’. They are items of tangible, movable property — something you can both touch and move. Your personal possessions will normally be tangible, movable property, including:

• items of household furniture
• paintings, antiques, items of crockery and china, plate and silverware
• motor cars, lorries, motorcycles
• items of plant and machinery not permanently fixed to a building

The remainder of this helpsheet refers to personal possessions. Private cars are exempt from CGT and personal possessions having only a limited lifespan are also exempt (see the guidance on wasting assets in parts 4 and 5 below). But if you dispose of any other personal possessions, you may be liable to CGT.

Have you made a gain

You only need to include in your tax return any gain on the disposal of personal possessions where the disposal proceeds were more than £6,000 and the personal possessions are not exempt from CGT. The disposal proceeds will normally be the amount of money you received when you disposed of the personal possessions. Sometimes, however, you need to use the market value of the personal possessions instead. For example, if you gave it away or sold it to a connected person. See the guidance on when to use the market value in the Capital Gains Tax summary notes.

Section 2. Disposal of a single personal possession explains how to calculate gains and losses.

Section 3. Sets of personal possessions explains the special rules that apply if you dispose of a set of personal possessions.

Section 4. Wasting assets and section 5. Business assets explain the rules for personal possessions that are wasting assets or that were used in a business.

2. Disposals of a single personal possession

How to calculate gains and losses

You do not need to calculate any gain on the disposal of a personal possession if the disposal proceeds did not exceed £6,000. If the proceeds exceeded £6,000 but were not more than £15,000, the amount of the gain to return depends on the amount of the:

• disposal proceeds
• actual gain

To find out the gain to include in the CGT summary pages, work through the following steps.

Step 1 Work out the amount by which the disposal exceeds £6,000.

Step 2 Multiply the figure at step 1 by 5÷3.

Step 3 The result is the maximum chargeable gain.

Step 4 Work out the net gain using the Capital Gains Tax summary notes.

Step 5 Include in your Capital gains summary pages the lower of the net gain (step 4) and the maximum chargeable gain (step 3).

Example 1

You sell an antique mirror for £7,500 that originally cost you £1,500. There were incidental costs of sale totalling £250. The disposal proceeds exceed £6,000.

Calculate the amount by which the disposal proceeds exceed £6,000:

1. Deduct £6,000 from the sale price of £7,500. This comes to £1,500.
2. Multiply this by 5÷3 (£1,500 × 5÷3) which equals £2,500.

This is the maximum chargeable gain.

Now you can work out the actual gain. Your calculation will be:

1. Take disposal proceeds of £7,500.
2. Deduct the sale expenses of £250 (£7,500 − £250 = £7,250).
3. Now take away £1,500 (the original cost of the mirror) from £7,250. This gives you an actual gain figure of £5,750.
4. Compare this with the maximum chargeable gain and enter the lower figure, which is £2,500.

If the proceeds were more than £15,000 work out your chargeable gain simply using the Capital gains summary notes.

What happens if a loss is made

You cannot claim a loss on the disposal of your private car or, in most cases, if the personal possession was a wasting asset. Wasting assets are covered in Part 4 of this helpsheet.

The amount you can claim as a loss on the disposal of a personal possession also depends on the amount of the disposal proceeds.

If the disposal proceeds were less than £6,000, then your loss is restricted by treating the disposal proceeds as £6,000 and recalculating the loss on the disposal. If the disposal proceeds were £6,000 or more, the loss you can claim is not restricted.

3. Sets of personal possessions

The normal rules for calculating gains or losses on the disposal of a personal possession may not apply if you dispose of a ‘set’ of personal possessions.

What is a set

A set is a number of personal possessions that are:

• similar and complementary to each other
• worth more together than separately

Examples of sets may include:

• chessmen
• books by the same author, or on the same subject
• matching ornaments such as vases or statuettes

This is not a full list. If you require more details, ask HMRC or your tax adviser.

What happens when you dispose of a set

If you dispose of a number of personal possessions that form a set, the £6,000 limit that normally applies to a single personal possession, applies to the set.

There are special rules that apply to sets which have been broken up and sold separately.

If the parts of the set were:

• owned by you at the same time
• disposed of by you to the same person, or a number of people acting together, or a number of people who are connected

Then the £6,000 limit applies to all of the set collectively and not to each member of the set individually.

Example 2

You own a full 32 piece set of antique chessmen that cost you £3,200 (that is, each piece cost £100). Together, the set is worth £32,000.

You sell the pieces individually to an antique dealer for £1,000 each. If the £6,000 limit were to be applied to each piece, disposals would be exempt from CGT. But the pieces form a set, so the £6,000 limit applies to the total consideration of £32,000 and you have chargeable gains of £28,800.

4. Wasting assets

A wasting asset is an asset with a predictable life of 50 years or less. When you dispose of an asset, you estimate its predictable life based on the nature of the asset and your intended use of the asset when you originally acquired it. Certain personal possessions are always treated as wasting assets, for example, plant or machinery.

Any gain or loss on the disposal of a personal possession which is a wasting asset is exempt from Capital Gains Tax unless:

• you have, or could have, claimed capital allowances for it
• you loaned a personal possession which had a predictable life of more than 50 years, such as a piece of jewellery, work of art or antique, to a business which then used it as plant

Section 5 below deals with personal possessions which are wasting assets but which aren’t exempt.

5. Business assets

If you dispose of a personal possession which is a wasting asset that you’ve used in a business, trade, profession or vocation and you have, or could have, claimed capital allowances for it, then any gain you make will not be exempt and must be included on your tax return. This also applies to a personal possession which had a predictable life of more than 50 years, such as a piece of jewellery, work of art or antique, which you loaned to a business to use as plant.

You need to take account of any capital allowances in working out your gain or loss. Helpsheet 222 How to calculate your taxable profits, explains how to calculate capital allowances.

If you dispose of an asset that has been used in a business, any loss you make will be restricted to take account of the capital allowances you’ve received.

Example 3

You acquire an item of plant for £20,000 and use it in a trade. You are entitled to claim capital allowances. After 3 years, you sell it for £7,500. You claimed net capital allowances, including any balancing charge or balancing allowance, of £12,500.

You have had the whole of your loss of £12,500 as capital allowances. So your CGT allowable loss is reduced to zero.

Contact

Online forms, phone numbers and addresses for advice on Self Assessment.