This guide will help you calculate capital gains and losses if you sell or otherwise dispose of personal possessions in the 2012-13 tax year. You'll find here examples of the special rules that apply for 'tangible and movable' personal possessions (meaning you can touch and move them).
On this page:
You must work out the gain or loss separately for each personal possession that you sell, give away or otherwise dispose of. This step-by-step guide explains how to do that in straightforward cases.
But some personal possessions that you can touch and move aren't liable to Capital Gains Tax, for example:
You can find out more about typical taxable possessions using the link below.
If you sell or dispose of other assets in 2012-13, for example shares, property and business assets you must work out each gain or loss separately. See the 'More useful links' section at the bottom of this page for more help with this.
The amount received for your personal possession is usually the sale price. This is the amount of money you received for the possession when you sold or disposed of it.
However, sometimes you need to use the market value of the possession instead of the sale price. The market value is the price it might reasonably be expected to have fetched on a sale in the open market.
You use the market value of the personal possession instead of the sale price if, for example:
If you sell or dispose of a personal possession to your husband, wife or civil partner you usually won't have to pay any Capital Gains Tax on that disposal. You must have lived together for at least part of the tax year in which you make the disposal.
This does not apply to other people you're connected with (for example, your brother).
This does not apply if you're separated for the whole of the year in which the disposal occurs. You must use the market value of the asset disposed of, at the date of disposal, as the amount received.
The cost of your personal possession is normally the amount you paid when you bought or acquired it.
However, sometimes you need to use the market value of the personal possession instead of the cost.
You use the market value of the possession instead of the cost if:
If you received the asset from your husband, wife or civil partner when you were living together, you usually use the amount the asset cost them.
But if your husband, wife or civil partner owned the asset at 31 March 1982, you use the market value on that day instead.
HM Revenue & Customs (HMRC) can check your valuation, to help you complete your Self Assessment tax return. To request this complete form CG34 Post Transaction Valuation Check after you've disposed of the asset. Form CG34 contains the address you should send it to.
Please allow at least two months for HMRC to check the valuation.
If you have spent extra money to buy, sell or improve a personal possession, you can deduct certain costs.
Costs you can deduct include:
You need to work out the gain or loss so far.
Losses - if you'd sold the possession at a loss, check out the time limits for claiming it, see the link below.
Gains - if you received less than £15,000 for your asset, there's an extra step you need to include in your calculation. You may not have to pay tax on all of the gain.
This step ensures you don't pay tax in full for a possession worth £6,001, when you wouldn't have paid tax at all on a possession worth £6,000 or less. It works on a sliding scale.
To work this out:
Step 1: work out how much more than £6,000 the amount you've received is - then multiply this figure by five-thirds.
Step 2: compare this with the actual gain.
Step 3: include the lower amount as your capital gain.
In August 2012 you sold an antique for £7,500.
The amount received is £1,500 more than the £6,000 exemption limit.
You multiply £1,500 by five-thirds getting a figure of £2,500.
You sold the antique for £7,500.
It cost you £2,000.
So the actual gain is £5,500.
You only pay Capital Gains Tax on the lower amount of £2,500 and not on the actual gain.
You need to work out the gain or loss so far.
Gains - if your possession was individually worth £6,000 or less when you sold or disposed of it, the gain is not liable to Capital Gains Tax.
Losses - if you made a loss on a possession worth £6,000 or less, the loss you can claim is restricted. You're treated as if you'd disposed of the asset for £6,000 instead - this has the effect of restricting the loss that's allowable.
In June 2001 you bought a painting for £8,000.
In June 2012 you sold the painting for £5,500.
The painting was worth less than £6,000 when you sold it, so the loss you can claim is restricted.
To work out the loss, you're treated as if you'd sold the painting for £6,000.
The loss you can claim is £2,000 (£8,000 less the deemed sale price of £6,000) and not £2,500 (£8,000 less the actual sale price of £5,500).
If you've used your personal possession for business purposes you may be able to apply certain tax reliefs. See the link below to the business area to find out more.
Through steps 1 to 5, you've worked out the gain or loss on your personal possession and applied any reliefs due.
If you sell or dispose of other assets in 2012-13, repeat these steps to work out the separate gain or loss for each asset.
See the 'More useful links' section below for help on:
In most cases:
In July 2012 Mr P's overall gain was £70,600.
The Annual Exempt Amount for individuals for 2012-13 is £10,600.
Mr P's gains are above this amount - so he deducts the Annual Exempt Amount from his gains.
He is liable to tax on £60,000 (£70,600 - £10,600).
Mr P is a higher rate tax payer so the Capital Gains Tax rate is 28 per cent.
He must pay Capital Gains Tax of £16,800 (£60,000 × 28%).