Taxation (UK) · Gains and losses on the disposal of movable and immovable property

Chattels and Wasting Assets in ACCA TX-UK

Updated 11 October 2026

Chattel: tangible movable property. Cost and proceeds both £6,000 or less: no gain or loss. Proceeds over £6,000, cost £6,000 or less: gain capped at 5/3 × (proceeds − £6,000). If proceeds are below £6,000 and cost is above, a loss uses deemed proceeds of £6,000. A wasting chattel (life 50 years or less) is exempt unless capital allowances were available.

Understand Chattels and Wasting Assets

A chattel is tangible movable property, such as a painting, a piece of jewellery, furniture or a boat. A wasting asset is any asset with an expected life of 50 years or less. A wasting chattel is a chattel that is also a wasting asset.

The key point is that these two ideas are different. A chattel is defined by being tangible and movable. A wasting asset is defined by its life. Many chattels are not wasting (a painting). Many wasting assets are not chattels (a lease with 40 years to run is a wasting asset, but it is not a chattel).

The general rule for chattels is the £6,000 rule. It is based on both the cost and the proceeds of the item. It removes small disposals from the charge, and it softens the cliff edge when proceeds are just above £6,000.

A wasting chattel, such as a racehorse or a yacht, is an exempt asset. No gain arises and no loss is allowed. The exception is a wasting chattel on which capital allowances were or could have been claimed, for example because it was used in a business. It is not exempt as a wasting chattel. It is treated as an ordinary chattel, so the £6,000 rule applies. If you compute a loss, the cost is reduced by the capital allowances claimed, because the allowances have already given relief.

A wasting asset that is not a chattel is chargeable. Its cost is written off over its life, so the allowable cost falls as time passes. Your exam usually tests the £6,000 rule and wasting chattels, rather than the detailed wasting-asset cost write-off.

Key rules to remember

Both cost and proceeds £6,000 or less: Gain or loss = nil; Exempt. No loss can be claimed either.
Proceeds over £6,000, cost £6,000 or less (marginal relief): Gain = lower of (proceeds − cost) and 5/3 × (proceeds − £6,000); The 5/3 cap stops the gain exceeding that fraction of the excess over £6,000.
Proceeds over £6,000 and cost over £6,000: Gain = proceeds − cost; Normal computation. The £6,000 rule gives no relief.
Loss where proceeds are under £6,000 and cost is over £6,000: Allowable loss = cost − £6,000 (deemed proceeds of £6,000); Use deemed proceeds of £6,000. The loss is smaller than the actual loss.
Wasting chattel: Gain or loss = exempt; A wasting chattel has a predictable life of 50 years or less. Not exempt if capital allowances were available on it.
Wasting asset definition: Expected life ≤ 50 years; Freehold land is never a wasting asset.

How to solve Chattels and Wasting Assets questions

Use this order for any chattel or wasting asset question. Classify the asset before you do any arithmetic.

1Decide if the asset is tangible movable property. If not, it is not a chattel, so stop using the £6,000 rule.
2Check whether it has a predictable life of 50 years or less. If yes, it is a wasting chattel and is exempt, unless the next step applies.
3Check if capital allowances were or could have been claimed on the item, for example because it was used in a business. If so, it is not exempt as a wasting chattel. Treat it as an ordinary chattel and apply the £6,000 rule. If a loss arises, reduce the cost by the allowances claimed.
4Compare cost and proceeds with £6,000. Sort into four cases: both at or below, gain with proceeds above, loss with proceeds below, and both above.
5For a gain with proceeds above £6,000 and cost at or below, compute both the normal gain and 5/3 × (proceeds − £6,000). Take the lower.
6For a loss where cost is above £6,000 and proceeds are below, substitute proceeds of £6,000 and compute the loss.
7Use gross proceeds, before any incidental selling costs, for the £6,000 tests and in 5/3 × (proceeds − £6,000). Treat selling costs as part of allowable cost. For a loss with deemed proceeds of £6,000, add them to the cost. Then carry the gain or loss into the annual exempt amount and losses working.

Quickest way: Four-box £6,000 check

When to use it: Use this for Section A and OT case questions where you need a quick answer on a single chattel.

Ask first: is it a wasting chattel such as a racehorse or a yacht? If yes, the answer is nil, unless capital allowances were available on it. In that case use the £6,000 rule below.
If cost and proceeds are both £6,000 or less, the answer is nil.
If proceeds are over £6,000 and cost is £6,000 or less, compute 5/3 × (proceeds − £6,000) and compare with the normal gain. Choose the lower.
If proceeds are below £6,000 and cost is above, replace proceeds with £6,000 to find the loss.
Otherwise compute proceeds − cost as normal.

Common mistakes in Chattels and Wasting Assets

Treating the £6,000 as an annual exempt amount or a deduction from the gain.
Students link £6,000 with the exempt amount idea.
Fix: It is a test of cost and proceeds for each item. It never reduces the gain directly. The annual exempt amount is £3,000 and is applied later.
Forgetting that the marginal relief gives the lower of two figures.
Students compute only the 5/3 figure and stop.
Fix: Always compute the normal gain as well. Write both figures and circle the lower one.
Claiming a loss in full when proceeds are under £6,000 and cost is over £6,000.
Students use actual proceeds.
Fix: Substitute £6,000 for proceeds. The loss is cost minus £6,000.
Confusing a wasting asset with a wasting chattel.
The terms sound alike and both involve a 50-year life.
Fix: A wasting chattel must also be tangible and movable. A short lease is a wasting asset but not a chattel, so it is not exempt.
Treating a wasting chattel used in a business as exempt.
Students stop reading after spotting the 50-year life.
Fix: Check whether capital allowances were available. If so, the asset is not exempt as a wasting chattel. Apply the ordinary £6,000 chattel rule, and reduce the cost by the allowances claimed when computing a loss.
Applying the £6,000 rule to a set of items as if they were separate.
Students treat each item separately by habit.
Fix: Items that form a set, such as matching vases sold to the same buyer, are treated as one disposal. Combine them before testing against £6,000.

Worked examples

Example 1

Priya sold a painting for £9,000 in December 2026. She bought it in 2019 for £4,500. Compute her chargeable gain, ignoring selling costs.

Show the solution

A painting is a chattel and not a wasting chattel. Proceeds are above £6,000 and cost is below £6,000, so marginal relief may apply.
Normal gain = £9,000 − £4,500 = £4,500.
Marginal relief cap = 5/3 × (£9,000 − £6,000) = 5/3 × £3,000 = £5,000.
The gain is the lower of £4,500 and £5,000.

Answer: The chargeable gain is £4,500. The cap does not bite here because the normal gain is lower.

Example 2

Tom sold a set of two antique chairs to one buyer for £4,800. He bought the set for £7,500. Separately, he sold a vintage racing boat with a life of 20 years for £30,000 that cost him £12,000. He never used the boat in business. Compute the allowable loss or gain on each.

Show the solution

The chairs are a chattel set and count as one disposal. Proceeds are below £6,000 and cost is above, so the loss rule applies.
Deemed proceeds are £6,000. Allowable loss = £7,500 − £6,000 = £1,500.
The boat is tangible and movable. Its predictable life is 20 years, which is 50 years or less, so it is a wasting chattel.
No capital allowances were available, because there was no business use. So the boat is exempt.

Answer: The chairs give an allowable capital loss of £1,500 (not the actual loss of £2,700). The boat gives no gain and no loss. The actual gain of £18,000 is exempt.

Exam tips

Write a one-line classification first: chattel, wasting chattel, or neither. Markers reward correct classification even if arithmetic slips.
In OT questions, read the cost figure carefully. Many options are built from using proceeds instead of the £6,000 deemed amount.
Always show both figures in a marginal relief question. Section C markers look for the comparison.
Remember the annual exempt amount of £3,000 comes after you have found the gain. Do not apply it inside the chattel rule.
If a question mentions business use, pause and think about capital allowances before you call an asset exempt.

Practice questions from Gains and losses on the disposal of movable and immovable property

Chattels and Wasting Assets: frequently asked questions

What is the chattels exemption of £6,000 in TX-UK?

If both the cost and the proceeds of a chattel are £6,000 or less, there is no gain and no loss. If proceeds are above £6,000, a gain is still charged but capped using marginal relief. The test applies to each disposal, with sets treated as one.

How do you calculate the gain on a chattel sold for more than £6,000?

Where cost is £6,000 or less, compute the normal gain and also 5/3 × (proceeds − £6,000). The gain is the lower of the two. Where cost is above £6,000, simply use proceeds minus cost.

How do you calculate the loss on a chattel sold for less than £6,000?

If cost is £6,000 or less, there is no loss allowed. If cost is above £6,000, substitute £6,000 for the actual proceeds. The allowable loss is then cost minus £6,000.

What is the difference between a wasting asset and a wasting chattel?

A wasting asset is any asset with an expected life of 50 years or less. A wasting chattel is a wasting asset that is also tangible movable property. A wasting chattel is generally exempt, but a wasting asset that is not a chattel, such as a short lease, is chargeable.