Tx notes fa22 Final

non wasting chattel
is one with an estimated remaining life of more than 50 years. 
Examples include antiques and paintings. There are special rules to determine the chargeable 
gain or capital loss, known as anti-avoidance rules.
 
Example 10 
JM sold the following assets in December 2022:
(a)
an antique table which had cost £3,000 in February 2016 and sold for £5,000
(b)
a painting which had cost £2,000 in January 2019 and sold for £10,000
(c)
an antique vase which had cost £8,000 in August 2003 and sold for £3,000
(d)
a vintage car which had cost £7,000 in July 2000 and was sold for £9,000
Calculate the net chargeable gains or losses arising for JM in December 2022 
Cost
Proceeds
Treatment 
≤
£6,000
≤
£6,000
Exempt
≤
£6,000
> £6,000
Normal calculation but the gain is restricted to a 
maximum 5/3 x [Gross proceeds – 6,000]
> £6,000
<£6,000
Deemed Gross Proceeds = £6,000
> £6,000
> £6,000
Normal calculation

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6. Other wasting assets (that are not chattels) 
An example of a wasting asset which is not a chattel is a copyright.
The allowable expenditure is deemed to waste away over the life of the asset on a straight line basis.
When a disposal is made, the allowable expenditure is restricted to take account of the assets 
natural fall in value. This fall in value is deemed to occur on a straight line basis over its predictable 
useful life.
Therefore to compute the allowable cost the original cost must therefore be reduced BY
where:
P = Period of ownership of seller
L = Predictable Life of asset on acquisition
C = Cost of the asset
S = Scrap / residual value at the end of the assets’ predictable life