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HMRC internal manual

Capital Gains Manual

Wasting assets: chattels: CGT exemption

TCGA92/S44(1)(c) and (d)

The predictable life of any chattel (tangible moveable property) is the useful life of the chattel taking account of the purpose for which the person making the disposal acquired it.

There are special rules for:

  • Livestock: All animals are treated as wasting assets, whether or not they are mature when they are acquired.
  • Plant and machinery: All plant and machinery is always regarded as having a predictable life of less than fifty years.  Such items will always be wasting assets. This rule applies no matter what the actual life of the item of plant or machinery proves to be.  Where, however, the item has been used in a business, you may need to look at the special rules where capital allowances are involved. CG15400+ tell you about these.

The words `plant’ and `machinery’ are not defined in TCGA92, so we give them their normal meanings.

PLANT has the same general meaning as it has for Capital Allowances, but Chapter 3 Part 2 CAA01 does not apply for Capital Gains Tax.

MACHINERY includes any machine or its parts, mechanism or works.  A machine is any apparatus which applies mechanical power.

If the predictable life of any chattel is fifty years or less, so that it is treated as a wasting asset, it is exempt from Capital Gains Tax unless:

  • capital allowances were or could have been claimed on it (see CG15400+), or
  • section 45(3B) applies (see CG76722a).

It should be noted that where a chattel which is a wasting asset is disposed of at a loss, that loss is only allowable if:

  • capital allowances were, or could have been, claimed, or
  • section 45(3B) applies.

There are special rules where losses and capital allowances are both involved. CG15400+ tell you about these.