Chargeable gain

Plant and machinery are always wasting assets (they tend to fall in value) and if they are moveable, they are chattels. If they are sold for less than the price originally paid for them, relief for the fall in value will have been given through the capital allowances computation, so any loss is not allowable for CGT (as this would mean that loss relief would be given twice). However, if they are sold for more than the price originally paid for them, the gain is chargeable but subject to the £6,000 rule; i.e. if both proceeds and cost are greater than £6,000, the gain is chargeable as normal, but if proceeds are more than £6,000 and cost was less than £6,000, then the 5/3 rule applies to restrict the gain.