CG15400 | Capital allowances: computational changes

TCGA92/S41, S45 & S47

Where the expenditure on an asset has qualified for capital allowances or renewals allowance, there are two circumstances in which the normal rules for computing the chargeable gain on a disposal of that asset may change. They are:

• if the asset is disposed of at a loss (TCGA92/S41), see CG15410 onwards,

or

• if the asset is a wasting asset (TCGA92/S45 and TCGA92/S47), see CG15440 onwards.

For all other disposals the computation is unaffected by the fact that capital allowances have been given. In particular:

• the capital gains allowable expenditure is not restricted simply because capital allowances or renewals allowances have been given, section 41(1),

• nor is the capital gains disposal consideration reduced because there is, as a result of the disposal,

• a capital allowances balancing charge, or

• an adjustment under CAA01/S55 (plant and machinery),

see TCGA92/S37(2).

TCGA92/S44 & TCGA92/SCH3/PARA7 – Plant and machinery

If the assets which qualify for capital allowances are plant and machinery, there are further provisions which need to be taken into account:

• under TCGA92/S44(1)(c), plant and machinery must be treated as a wasting asset (see CG15435),

• TCGA92/SCH3/PARA7 will exclude the plant and machinery from a rebasing election made under TCGA92/S35(5) (see CG16780).

For all other disposals the computation is unaffected by the fact that capital allowances have been given. In particular

• the capital gains allowable expenditure is not restricted simply because capital allowances or renewals allowances have been given, TCGA92/S41 (1),

• nor is the capital gains disposal consideration reduced because there is, as a result of the disposal,

• a capital allowances balancing charge, or

• an adjustment under CAA01/S55 (plant and machinery),

see TCGA92/S37 (2).