CGT on chattels and wasting assets: What’s exempt?

Chattels are tangible, movable personal property (e.g., art, antiques, jewellery and furniture). For capital gains tax (CGT) purposes, they are split into wasting chattels with a predictable life of 50 years or less, which are usually exempt and non-wasting chattels with a life of over 50 years, which are potentially taxable if sale proceeds exceed specific monetary thresholds. In legal and estate definitions, ‘plate’ (silverware, goldware, or solid metal utensils or ornaments) is explicitly listed alongside items like jewellery, linen, and furniture as a personal chattel.

Definition and types of chattels

Chattels mean physical, movable property that can be touched and relocated. Wasting chattels are items with a useful life of 50 years or less (e.g., cars, boats, yachts, clocks or wine). These are generally exempt from CGT, but not if capital allowances are claimed, which ensures that a tangible moveable property exemption, say, for boats/yachts under TCGA 1992, s 45(1) will not apply by reason of a capital allowances claim under section 45(2). Non-wasting chattels are items with a useful life of more than 50 years (e.g., fine art, antiques, expensive jewellery), and these are subject to the standard CGT rules.

Tax exemptions and relief rules

• a.)  The £6,000 threshold: If an individual chattel is sold for £6,000 or less, any resulting gain is completely exempt from CGT.
• b.) Marginal relief ‘5/3rds on excess rule’: If sale proceeds are between £6,000 and £15,000 for a non-wasting asset, the taxable gain is capped at five-thirds of the amount exceeding £6,000 if lower than the actual gain.
• c. ) Anti-avoidance on sets: Splitting up a matching set of items, e.g., a matching pair of chairs or a set of chess pieces into separate sales to bypass the £6,000 limit cannot avoid a tax charge.

Inclusion of ‘plate’

i.) Silver and gold plate: Historically and legally referenced, ‘plate’ refers to valuable vessels, utensils, or decorative items (e.g., silver platters, tea sets and so on, made of silver, gold, or other precious metals).

ii.)  Plated articles: Traditional historical legal phrasing in the Administration of Estates Act 1925, s 55(1)(x) specified ‘plate and plated articles’ to ensure electroplated or silver gilt items are covered under personal effects; this legal phrasing was changed to the all encompassing modern ‘tangible movable property’ framing.

Medals

In the UK, medals are treated as tangible movable property. Sales of individual medals for £6,000 or less are entirely exempt from CGT; however, certain bullion coins such as British Sovereigns and Britannias are completely CGT-free regardless of profit size, due to their ‘legal tender’ exemption.

Honour medals and for valour

Under UK tax law, a disposal or gift of a decoration awarded for valour or gallant conduct is completely free of CGT, provided the person making the disposal did not originally acquire the medal for money or money’s worth (e.g., buying the medal at an auction).

If a valour medal was purchased with money and later sold or gifted, the special valour exemption does not apply.

Bonded whisky barrels

In the UK, whisky maturing in bonded oak barrels is classified as a tangible movable property and a wasting asset with a predictable useful life of under 50 years due to evaporation termed the ‘angels’ share’. Consequently, private individual sales of these casks as an investment are fully exempt from CGT. Note that casks inside a bonded warehouse facility do not incur excise duty or VAT until they are removed or bottled.

Practical tip

The official descriptive estate form to use is IHT407 by personal representatives to list household and personal goods, specifying which items are standard, sold, or even carrying a specific heritage exemption claim.