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Q. I am looking to raise some funds by selling some personal possessions, some of which have appreciated in value quite considerably. I've heard there is a special exemption that might mean I don't need to pay CGT on any gains. Is that correct?

A: One of the unfortunate consequences of the coronavirus pandemic is that many individuals are selling personal possessions to help raise funds, either for themselves or for family members. There are actually two exemptions that may be of use to you.

The first is the wasting assets exemption. This applies to assets that have an expected useful life of 50 years or less (based on the nature of the asset and its intended use when it was acquired), and completely exempts the asset from CGT. Machinery is always treated as having an expected useful life of less than 50 years, so things like cars or clocks always qualify. Things are less clear cut when it comes to things like fine wine collections, and you should seek advice from a specialist. Note that the exemption doesn't apply to assets used in a business if you claimed, or could have claimed, capital allowances in respect of them.

If the asset you sell has an expected useful life of more than 50 years, there is a limited chattels exemption. The exemption is calculated as follows:

  • if you receive £6,000 or less from the sale, it is wholly exempt from CGT
  • if you receive more than £6,000, the amount chargeable to CGT will be the lower of the actual gain, or 5/3rds of the difference between £6,000 and the amount received for the sale.

As a result, the chattels exemption will only be of use where the proceeds received are less than £15,000.

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Added By: Sharon Worger on 13th May 2021 - 16:42
Number of Views: 52
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