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ACCA Strategic Professional · Advanced Taxation (UK) · Capital gains tax: the scope of the taxation of capital gains

Priya, a UK resident higher rate taxpayer, owns a vintage car bought for £8,000 and a pair of antique vases bought for £4,000. Which statement about CGT on disposals is correct?

A gain on the vintage car is not chargeable because a private motor car is an exempt asset for CGT. The vases are a different matter, since chattels are chargeable unless within the chattel rules. The £6,000 chattel limit does not govern the car's exemption.

  1. AA private motor car is an exempt asset, so a gain on the vintage car is not chargeableCorrect
  2. BA gain on the vases is exempt because they are tangible movable property
  3. CBoth disposals are chargeable at the 24% higher rate with no exemption available
  4. DThe car is exempt only if the sale proceeds are below £6,000

Explanation

Motor cars suitable for private use are exempt assets, so the vintage car gain is outside CGT. The vases are tangible movables, which are chargeable unless they are wasting chattels or within the chattel limit of £6,000. The £6,000 limit applies to chattels, not to cars.

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