How spouses can super-charge the chattel rules

The issue

There are special capital gains tax rules for tangible moveable property (chattels) which can include a wide variety of assets such as books, wine and clocks. The main special rules are as follows:

1. If you dispose of a chattel which cost less than £6,000 for £6,000 or less, then there is no chargeable gain.
2. If you dispose of a chattel which cost less than £6,000 for more than £6,000, then the gain can be no more than 5/3 of the amount by which the proceeds exceed £6,000. This restriction is only relevant for assets that are sold for no more than £15,000.
3. If you sell a chattel for less than £6,000 and make a loss, then the loss is restricted to what the position would have been had you disposed of the chattel for £6,000.

If a set of assets is sold to one person or a group of people acting in concert, then the assets are treated as a single asset for the purposes of the above rules.


In a tax year Martin makes the following sales:

1. He sells a painting for £5,000 which cost him £2,000.
2. He sells an antique table for £8,000 which cost him £3,000.
3. He makes a loss on a vase by selling it for £5,000 when it had cost £7,000.

Here there will be no taxable gain in respect of the painting, the gain on the table will be restricted to £3,333 (5/3 of £2,000) and the loss on the vase will be restricted to £1,000.

Spouses and civil partners

If spouses and civil partners acquire assets jointly or move assets into joint ownership at a later date, the power of the above rules is doubled.


Lisa and Brian (who are married) jointly buy a painting for £2,000 and sell it some years later for £12,000. There will be no capital gains tax to pay on this disposal.

Had Lisa bought and sold the painting in her own name then she would have made a gain of £10,000 (the 5/3 rule above doesn’t help us here because that also gives £10,000).

The saving could also have been achieved if Lisa had transferred a 50% share in the painting to Brian prior to the sale.

Forbes Dawson view

Given that the capital gains tax annual exemption was cut from £12,300 to £6,000 on 6 April 2023 and will be further cut to £3,000 on 6 April 2024, the planning above will become much more relevant. However, it is important to remember that this only works for capital transactions and trading transactions would be subject to income tax. If this becomes a more widespread strategy, then it may even drive up the price of art at the lower end of the market!




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