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HMRC internal manual

Capital Gains Manual

Capital allowances: computational changes

TCGA92/S41, S45 & S47

Where the expenditure on an asset has qualified for capital allowances or renewals allowance, there are two circumstances in which the normal rules for computing the chargeable gain on a disposal of that asset may change.  They are:

  • if the asset is disposed of at a loss (TCGA92/S41), see CG15410 onwards,


  • if the asset is a wasting asset (TCGA92/S45 and TCGA92/S47), see CG15440 onwards.

For all other disposals the computation is unaffected by the fact that capital allowances have been given.  In particular:

  • the capital gains allowable expenditure is not restricted simply because capital allowances or renewals allowances have been given, section 41(1),
  • nor is the capital gains disposal consideration reduced because there is, as a result of the disposal,


  • a capital allowances balancing charge, or
  • an adjustment under CAA01/S55 (plant and machinery),

see TCGA92/S37(2).

TCGA92/S44 & TCGA92/SCH3/PARA7 – Plant and machinery

If the assets which qualify for capital allowances are plant and machinery, there are further provisions which need to be taken into account:

  • under TCGA92/S44(1)(c), plant and machinery must be treated as a wasting asset (see CG15435),
  • TCGA92/SCH3/PARA7 will exclude the plant and machinery from a rebasing election made under TCGA92/S35(5) (see CG16780).