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HMRC internal manual

Capital Gains Manual

Chattels: losses

TCGA92/S262 (3)

CG76550+ tell you what happens when a gain arises on the disposal of a chattel (tangible moveable property).

If the consideration for the disposal of a chattel does not exceed £6,000, any loss is restricted. You do this by substituting £6,000 for the original figure of disposal consideration.

If the consideration for the disposal of a chattel exceeds £6,000, there is no restriction to any loss.

If an asset is acquired for £6,000 or less and disposed of for a lesser amount, no allowable loss accrues on that disposal.

Example

Mr C sells his son a painting for £5,000.  It had originally cost him £8,000.  He claims a loss of £3,000.

As this is a transaction between connected persons, see CG14580 onwards, the market value of the asset is used as the disposal consideration.  The painting has a market value of £4,000.

However, as the market value is less than £6,000, the loss is restricted to:

  £
   
deemed consideration 6,000
less cost 8,000
RESTRICTED LOSS 2,000

 

NOTE Companies and other concerns within the charge to Corporation Tax may be able to claim indexation allowance, see CG17207 onwards.