Under UK rules, capital gains tax on wasting assets almost never bites when the asset was for personal use. A wasting asset is anything with a predictable useful life of 50 years or less, and if it is also a tangible moveable object that never qualified for capital allowances, selling it is an exempt disposal — no tax to calculate, nothing to report. The rule tightens once business use, capital allowances, short leases, or intangible rights enter the picture, and that is where most of the real questions arise.
What Counts as a Wasting Asset
The test is whether the asset’s predictable life is 50 years or less at the point you acquire it.1Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 44 “Predictable life” refers to how long the asset is expected to remain functional under normal use, not how long you personally intend to keep it.
Plant and machinery are treated as wasting assets automatically, whatever any specific machine’s real lifespan. The statute assumes plant will be used up, so there is no need to prove a particular item will fail within 50 years.2HM Revenue & Customs. Capital Gains Manual – CG15440 Livestock, fixed-term licences, patents, and other legal rights that expire on a set date also qualify.
Land is never a wasting asset because it has no expiry date. A building on land can be one, but the land beneath it cannot.
The Exemption for Personal Wasting Chattels
A chattel is tangible moveable property — anything physical you can pick up and carry. If a chattel is also a wasting asset and has never qualified for capital allowances, its disposal is exempt from CGT no matter what you sell it for.3Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 45
The clearest example is private cars. Any motor vehicle built or adapted to carry passengers, of a type normally used privately, is not a chargeable asset.4HM Revenue & Customs. Capital Gains Manual – CG76906 Even a classic car that appreciates sharply escapes CGT under this rule. Household items, garden equipment, computers, and personal electronics sit in the same category: tangible, moveable, and expected to wear out.
The exemption cuts both ways. Losses on personal-use wasting chattels are ignored too. Sell your car for far less than you paid, and you cannot set that loss against other gains.
When the Exemption Falls Away
Section 47 removes the wasting chattel exemption if the asset ever qualified for capital allowances during your ownership.5Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 47 Capital allowances are the UK equivalent of depreciation for tax: they let businesses deduct equipment costs against taxable profits over time. Once those deductions have been claimed (or could have been claimed), any gain on disposal is potentially chargeable.6HM Revenue & Customs. Capital Gains Manual – CG15445
Assets Used Partly for Business
Not every asset is fully business or fully personal. Where an item was used partly for business and partly privately, or in a business for only part of the ownership period, the gain is normally apportioned. Only the business fraction is chargeable; the personal-use share stays exempt.7HM Revenue & Customs. Capital Gains Manual – CG76722
One trap deserves attention. If the asset was used as plant in someone else’s trade, and would not have been a wasting asset but for that use, s.45(3B) can remove the apportionment altogether and make the whole gain chargeable. This catches situations where, for example, you lease equipment to a business and the equipment only becomes “plant” because of how the lessee uses it. The entire gain becomes taxable with no personal-use carve-out.7HM Revenue & Customs. Capital Gains Manual – CG76722
Calculating the Gain When It Isn’t Exempt
Wasting assets that fall outside s.45 — intangible rights, short leases, and business assets that didn’t attract capital allowances — use a built-in write-down of the original cost. Rather than deducting the full purchase price from disposal proceeds, you deduct only the portion that has not yet wasted away.
The default method is straight-line depreciation. Subtract any expected scrap value from the original cost, then write off the remainder evenly over the asset’s predictable life.8HM Revenue & Customs. Capital Gains Manual – CG76772 Only the un-wasted balance counts as allowable expenditure. Suppose you paid £50,000 for an intangible right with a 25-year life and no scrap value, then sold after 10 years. The written-off amount is £20,000 (10/25 × £50,000), leaving an allowable cost of £30,000. Sell for £40,000 and the chargeable gain is £10,000.
Short Leases
Leases with 50 years or less remaining are wasting assets, but they don’t follow the straight line. Schedule 8 to TCGA 1992 sets out a curved percentage table that accelerates the write-down as the term shortens.9Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Schedule 8 A lease with 40 years to run retains 95.457% of its value for CGT; at 10 years it drops to 46.695%. The final five years fall off most steeply, reflecting how quickly a nearly expired lease loses value.
The gain calculation compares the Schedule 8 percentage at the start of ownership with the percentage at disposal. The fraction wasted between those two points is stripped out of allowable expenditure.
Assets That Qualified for Capital Allowances
For assets that fully qualified for capital allowances throughout your ownership, s.47 switches off the s.46 straight-line reduction. You calculate the gain using the full original cost, as though the asset were not wasting at all.5Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 47 The allowances you claimed are dealt with separately through balancing charges or allowances in the capital allowances system, not inside the CGT computation.
The £6,000 Chattels Threshold
Separate from the wasting asset exemption, a general chattels rule exempts any disposal of tangible moveable property where the sale proceeds are £6,000 or less.10Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 262 This matters most for items that are chattels but not wasting assets, like paintings or fine jewellery.
When proceeds cross £6,000 and a gain arises, marginal relief caps the taxable gain at five-thirds of the excess over £6,000.11HM Revenue & Customs. Capital Gains Manual – CG76577 The cap can shave real amounts off a gain on items sold just above the threshold. Once proceeds reach £15,000, the cap exceeds any realistic gain and the relief drops away.
For wasting chattels already exempt under s.45, the £6,000 threshold does no work — you’re exempt at any price. It becomes useful as a backstop for business-use wasting assets that have lost their s.45 exemption: if you sell a piece of business equipment for under £6,000, the general chattels rule can still shelter the gain.
Rates and the Annual Exempt Amount
For 2025–26, the annual exempt amount for individuals is £3,000.12GOV.UK. Capital Gains Tax – Rates and Allowances That is the total of chargeable gains you can realise in a tax year before any CGT is due. It was cut from £6,000 in 2023–24 and has stayed at £3,000 since.
On assets other than residential property, which is where most wasting assets sit, the rates from 6 April 2025 are 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers.13GOV.UK. Capital Gains Tax – Rates of Tax These rates were increased from 10% and 20% at the Autumn Budget 2024, effective 30 October 2024. Which rate applies depends on where the gain lands when stacked on top of your taxable income: gains within the basic-rate band are taxed at 18%, and anything above is taxed at 24%.
Reporting to HMRC
If your disposal is an exempt wasting chattel, there is nothing to report. No calculation, no entry on your return.
For non-exempt disposals, you generally need to report gains through Self Assessment if your total disposal proceeds for the tax year exceed £50,000 and you are registered for Self Assessment.14GOV.UK. Capital Gains Tax – Work Out if You Need to Pay Even where the gain falls within the annual exempt amount and no tax is owed, you may still need to report the disposal once proceeds cross that threshold. Keep records of the original cost, any enhancement expenditure, any capital allowances claimed, and the disposal proceeds; an accurate computation later depends on having them.