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HMRC internal manual

Capital Gains Manual

Chattels: examples: losses

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+, the market value of the asset is used as the disposal consideration. The painting has a market value of £4,000.

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

deemed consideration 6,000
less cost 8,000

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895+.