Part disposals, chattels and lost assets
Finance Act 2025 · 2025/26
1 Part Disposals
A chargeable gain may arise if only part of an asset is disposed of.
For example, if a taxpayer acquires 100 hectares of land and subsequently sells 40 of those hectares, this will give rise to a chargeable gain but a specific problem arises regarding what figure of cost should be used in the gains calculation.
The cost of the whole asset is multiplied by the following fraction to compute the allowable cost of the part now sold:
Allowable cost of a part disposal = original allowable cost × A / (A + B), where A is the gross disposal proceeds and B is the market value of the part retained.
where:
A = Gross proceeds of part disposed
B = Market value of the remainder of the asset at time of disposal (this will be given in the question)
Stanley owned 10 hectares of land which originally cost £24,000 plus legal fees of £2,000 in March 2022. He sold 2 hectares of the land in December 2025 for £16,000, incurring legal fees of £1,200.
The remaining 8 hectares were valued at £34,000 in December 2025.
Calculate the chargeable gain on the disposal of the 2 hectares of land in December 2025.
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Qasim sells part of land for £30,000. The remainder is worth £70,000. Original allowable cost is £40,000. There are no selling costs. Compute gain and remaining cost.
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2 Chattels
In this TX lecture: Wasting assets other than chattels, including the copyright example, and the residential-property CGT payment-on-account calculation are not examined in FTX. The 60-day payment due date remains examinable.
A chattel is a tangible moveable asset.
A wasting chattel is one with an estimated life of 50 years or less. These are exempt assets. Examples include racehorses, greyhounds (dogs), yachts (boats), caravans, machines.
There is an exception for plant & machinery on which capital allowances have been claimed, these assets are treated as non wasting chattels. If plant and machinery is not covered by the non-wasting chattel exemption in the exemption table below, then a gain would need to be computed upon its disposal. Such a calculation is seldom required however as it would normally be sold for much less than cost. A capital loss will not however arise in this situation as capital allowances will already have given tax relief for the net cost of the asset.
A non-wasting chattel is one with an estimated life of more than 50 years. Examples include antiques and paintings. There are special rules to determine the chargeable gain or capital loss as follows:
Cost | Proceeds | Treatment |
|---|---|---|
≤ £6,000 | ≤ £6,000 | Exempt |
≤ £6,000 | > £6,000 | Normal calculation but the gain is restricted to a maximum 5/3 x (Gross proceeds – 6,000) |
> £6,000 | <£6,000 | Deemed Gross Proceeds = £6,000 |
> £6,000 | > £6,000 | Normal calculation of the gain or loss |
Jonah sold the following assets in 2025/26:
(a) an antique table which cost £3,000 in February 2019 and sold for £5,000
(b) a painting which cost £2,000 in January 2022 and sold for £10,000. Selling costs were £500.
(c) an antique vase which cost £8,000 in June 2004 and sold for £3,000. Selling costs were £100.
(d) a vintage car which had cost £7,000 in July 2001 and was sold for £9,000
Calculate Jonah's net chargeable gains in 2025/26.
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Rani sells an antique for £7,500; original cost £2,000 and no fees. Compute the chargeable gain.
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3 Assets lost or destroyed
3.1 Destroyed or lost assets
If an asset is destroyed or lost and no compensation or insurance money is received there is a disposal which will result in a capital loss.
If there is any compensation or insurance monies received this will normally be used as proceeds in an ordinary gains computation.
The date of disposal is the date the insurance money is received. If the insurance money is used to buy a replacement asset within 12 months, the gain can be deferred until the new asset is sold.
If only part of the insurance money is used to buy a replacement asset then some of the gain will be taxed immediately and some of the gain will be deferred.
These principles apply to individuals without corporate indexation.
With no compensation, a loss arises from the allowable cost.
With compensation, use it as proceeds.
If reinvested in a replacement within 12 months, a claim can defer the gain into the replacement cost.
Where only part is reinvested, the immediate gain is the lower of the gain and the proceeds not reinvested; defer the remainder.
Sana’s non-wasting investment asset, cost £10,000, is destroyed. Insurance pays £16,000. She replaces it within 12 months for £14,000 and claims the available deferral. Compute immediate/deferred gain and replacement base cost.
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Amir sells a non-wasting antique for £4,000. Cost was £8,000 and there are no fees. Compute the allowable loss.