Advanced Taxation (UK) · Capital gains tax: gains and losses on the disposal of movable and immovable property

Chattels, Wasting Assets and Part Disposals for ACCA ATX

Updated 11 October 2026 · Fact-checked

A chattel is tangible movable property. Gains are exempt if proceeds are £6,000 or less. Above that, the gain is capped at 5/3 × (proceeds − £6,000). Wasting chattels (life of 50 years or less) are exempt, unless used in a business with capital allowances claimed or claimable. For part disposals, allowable cost is total cost × A ÷ (A + B).

Understand Chattels, Wasting Assets and Part Disposals

Capital gains tax (CGT) has special rules for movable property and for selling only part of an asset. They exist to remove small gains from the tax net and to stop you deducting the whole cost against only part of an asset.

A chattel is tangible movable property, such as a painting, a piece of jewellery or furniture. A wasting chattel is a chattel with a predictable life of 50 years or less. Examples are a racehorse or a boat. A wasting chattel is generally exempt from CGT, so no gain and no loss arises. The exception is a wasting chattel that is used in a business and on which capital allowances were or could have been claimed. That asset is not exempt. You treat it under the normal chattel rules below (the £6,000 limit and marginal relief). Most plant and machinery is a wasting chattel, so do not assume it is exempt. Check the facts for business use and capital allowances.

A non-wasting chattel, such as a painting or antique, is exempt if proceeds are £6,000 or less, whatever the cost. If proceeds are above £6,000, the gain is the lower of the normal gain and 5/3 × (proceeds − £6,000). This is the marginal relief. It stops a small excess over £6,000 from wiping out the whole exemption. Cost matters only for losses. If actual proceeds are below £6,000 and cost is above £6,000, the proceeds are deemed to be £6,000 when you compute the loss, which restricts it. If cost is £6,000 or less and proceeds are £6,000 or less, there is no gain and no allowable loss.

A part disposal happens when you sell only part of an asset, for example some of a plot of land. You cannot deduct all the cost. You apportion the original cost using A ÷ (A + B), where A is the proceeds of the part sold and B is the market value of the part kept at the date of disposal. The same method applies to other assets that can be divided. Remember the formula applies to cost, and also to any enhancement expenditure that relates to the whole asset.

In ATX these rules are often tested together with other issues, such as sets of chattels, joint owners, and gifts. Read the facts carefully for who owns what, and when.

Key rules to remember

Chattel exemption: Exempt if proceeds ≤ £6,000; The exemption limit is £6,000 of proceeds, whatever the cost. This is the usual chattel rule for gains. It is not shown in the tax tables, so learn it.
Chattel marginal relief: Maximum gain = 5/3 × (proceeds − £6,000); Where proceeds exceed £6,000, the chargeable gain is the lower of this figure and the normal gain.
Chattel loss restriction: Loss computed using deemed proceeds of £6,000 if actual proceeds are less than £6,000; Where cost exceeds £6,000, the loss is restricted this way. If cost is £6,000 or less and proceeds are £6,000 or less, there is no allowable loss.
Wasting chattel: Predictable life of 50 years or less = exempt, unless used in a business and capital allowances were or could be claimed; Exempt means no gain and no allowable loss. If the asset is used in a business and capital allowances were or could have been claimed, it is not exempt. Apply the normal chattel rules (£6,000 limit and marginal relief) instead.
Part disposal cost: Allowable cost = total cost × A ÷ (A + B); A = proceeds of the part sold. B = market value of the part kept at the date of disposal.
CGT rates and annual exempt amount: 18% and 24%; annual exempt amount £3,000; Taken from the tax tables provided in the exam. Apply the rate that fits the taxpayer's taxable income and gains.

How to solve Chattels, Wasting Assets and Part Disposals questions

Use this order for any question on chattels, wasting assets or part disposals. It keeps you from missing a rule or a mark.

1Identify the asset. Is it tangible and movable (a chattel) or land or another divisible asset?
2If a chattel, decide if it is wasting. Look for a predictable life of 50 years or less. If it is, it is exempt and you stop, unless it is used in a business and capital allowances were or could be claimed. In that case treat it as an ordinary chattel and use the £6,000 rules.
3For a non-wasting chattel, compare proceeds with £6,000. If proceeds are £6,000 or less, the gain is exempt whatever the cost. Check for a loss only if cost is above £6,000.
4If proceeds exceed £6,000, calculate the normal gain and the marginal relief figure 5/3 × (proceeds − £6,000). Take the lower as the chargeable gain.
5If proceeds are below £6,000 and cost is above £6,000, use £6,000 as deemed proceeds to compute the allowable loss.
6For a part disposal, work out A and B, then calculate cost × A ÷ (A + B). Deduct this from A to find the gain.
7Show the remaining cost carried forward for the part kept. It is the total cost less the cost used.
8Set the gain against losses and the annual exempt amount of £3,000, and apply the correct CGT rate. State any assumption you make.

Quickest way: Fast checks before computing

When to use it: Use this when you are short of time on a Section A or Section B question with several assets.

Scan each asset. Mark it W (wasting chattel), C (chattel) or P (part disposal).
Cross out W assets with a note: exempt. First check that the asset is not used in a business with capital allowances claimed or claimable. If it is, treat it as C.
For C assets, look at proceeds first. If proceeds are at or below £6,000, write exempt. Look at cost only if you need to test for a loss.
For C assets above £6,000, compute the 5/3 figure first. If it is smaller than the gain, you have your answer.
For P assets, write A and B at the top of the working before any arithmetic.

Common mistakes in Chattels, Wasting Assets and Part Disposals

Treating the £6,000 exemption as a deduction from the gain
It looks like an allowance, similar to the annual exempt amount.
Fix: It is a limit on proceeds. Above £6,000 you either use the normal gain or the 5/3 cap, whichever is lower.
Using 5/3 × (gain − £6,000) instead of proceeds
Students mix up the gain with the sale price.
Fix: Always start with proceeds. The formula is 5/3 × (proceeds − £6,000).
Allowing a full loss on a chattel sold for less than £6,000
Students apply normal loss rules and forget the deemed proceeds rule.
Fix: Where cost is above £6,000 and proceeds are below it, substitute £6,000 for proceeds when computing the loss.
Using the original cost of the whole asset in a part disposal
Students forget that only part was sold.
Fix: Apportion cost with A ÷ (A + B) and keep the balance for the part retained.
Using the sale value of the part kept as B instead of market value at the date of disposal
Students are given a value for the part sold and confuse the two.
Fix: B is the market value of the part you still hold at the disposal date. A is the proceeds of the part sold.
Treating all wasting assets as exempt without checking the life or capital allowances
Students recall only the headline rule.
Fix: Confirm a predictable life of 50 years or less. Then check whether the asset is used in a business and capital allowances were or could be claimed. If so, it is not exempt, so apply the £6,000 chattel rules.

Worked examples

Example 1

Amara sells a painting for £8,400. She bought it for £2,500 several years ago. Calculate her chargeable gain before the annual exempt amount.

Show the solution

Proceeds £8,400 exceed £6,000, so the exemption does not apply in full.
Normal gain: £8,400 − £2,500 = £5,900.
Marginal relief cap: 5/3 × (£8,400 − £6,000) = 5/3 × £2,400 = £4,000.
The chargeable gain is the lower of £5,900 and £4,000.

Answer: The chargeable gain is £4,000, before the annual exempt amount of £3,000.

Example 2

Rohan owns a plot of land that cost £120,000. He sells part of it for £90,000. The part he keeps is worth £210,000 at the date of sale. Calculate the chargeable gain and the cost carried forward on the remaining land. Ignore incidental costs.

Show the solution

A = £90,000 (proceeds of the part sold). B = £210,000 (market value of the part kept).
A + B = £300,000.
Allowable cost = £120,000 × £90,000 ÷ £300,000 = £36,000.
Gain = £90,000 − £36,000 = £54,000.
Cost carried forward = £120,000 − £36,000 = £84,000.

Answer: The chargeable gain is £54,000. The cost carried forward for the land retained is £84,000.

Exam tips

Write the 5/3 working out in full. Marks are given for the cap even if you later make an error.
In part disposal questions, label A and B clearly. Examiners often give several values, so choose carefully.
State why an asset is exempt, for example wasting chattel with a life of 50 years or less. A short reason earns the mark.
For multi-asset questions, finish with a single line that totals gains and losses, then deduct the £3,000 annual exempt amount and apply 18% or 24%.
Use the professional skills marks. If a client is considering selling a chattel, point out that selling just above £6,000 can be tax-inefficient and suggest the effect of the marginal relief.

Practice questions from Capital gains tax: gains and losses on the disposal of movable and immovable property

Chattels, Wasting Assets and Part Disposals in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Applied SkillsChargeable Gains: Part Disposals and Chattels

Chattels, Wasting Assets and Part Disposals: frequently asked questions

What is the chattel exemption limit for ATX?

Gains are exempt where proceeds are £6,000 or less. Above that, the gain is limited to 5/3 × (proceeds − £6,000) if that is lower than the normal gain. You need to remember this limit, as it is not in the exam tax tables.

What is the difference between a wasting and a non-wasting chattel?

A wasting chattel has a predictable life of 50 years or less and is generally exempt from CGT. The exception is an asset used in a business on which capital allowances were or could be claimed. That asset is not exempt and the £6,000 rules apply. A non-wasting chattel has a longer life, such as a painting, and is subject to the £6,000 rules.

How do I use the part disposal formula A/(A+B)?

A is the proceeds of the part sold and B is the market value of the part kept at the date of sale. Multiply total cost by A ÷ (A + B) to get the cost you can deduct. The rest of the cost is carried forward.

Can I claim a loss on a chattel?

Yes, but it is restricted. If you sold for less than £6,000 and the cost was higher, work out the loss using £6,000 as the proceeds. An exempt wasting chattel gives no allowable loss.