CG76577 - Chattels: exempt and chargeable gains: marginal relief

TCGA92/S262 (2)

If the consideration for the disposal of a chattel (tangible moveable property) is greater than £6,000, the chargeable gain may be restricted.

When a chattel is disposed of for more than £6,000 you calculate the difference between the disposal consideration and £6,000 then multiply that difference by 5/3. The answer is the maximum chargeable gain.

If the actual chargeable gain exceeds that amount, you exclude the excess and assess the smaller amount. If the actual chargeable gain is less than that amount, you assess the actual gain.

If the disposal consideration is £15,000 or more, the maximum chargeable gain exceeds the actual chargeable gain and no marginal relief is available.

Example

Miss S sells an antique mirror for £7,500. Her chargeable gain after allowing expenses is £4,000.

As the disposal consideration exceeds £6,000, the gain is not exempt but marginal relief is due.

First calculate the difference between the disposal consideration and £6,000:

	£
consideration	7,500
less	6,000
excess	1,500

The chargeable gain is the lesser of:

• £1,500 x 5/3 = £2,500

or

• the gain before marginal relief = £4,000

SO THE CHARGEABLE GAIN £2,500

NOTE Companies and other concerns within the charge to Corporation Tax may be able to claim indexation allowance, see CG17207 onwards.