Most personal possessions are potentially liable to UK capital gains tax (CGT), but the rules on ‘wasting assets’ (those with a predictable life of less than 50 years) and the £6,000 chattel exemption mean many everyday disposals don’t attract CGT.
This guide focuses on personal possessions held for enjoyment or long‑term ownership, not regular buying/selling that may amount to trading (with income tax/VAT implications). For an overview on the go, you can listen to us breakdown the key areas on our Private Wealth podcast:
Which personal possessions fall within CGT
If you’re thinking of selling or gifting items cluttering up your home, such as art, wine, classic cars, or a box of collectible cards, a quick ‘tax declutter’ at the same time could help you understand when CGT or IHT may apply. However, if you go beyond an occasional sort-out so that it looks more like a regular pattern of transactions, even if you only think of it as a ‘side-hustle’, you could be in danger of getting to the point where HMRC can argue you are trading, moving you out of CGT and into income tax (and potentially VAT). Seeking professional advice early on is key.
There are also different CGT rules for disposals of:
Understanding CGT on personal possessions
CGT doesn’t apply if the item is a wasting asset or if the disposal is a chattel and falls within the £6,000 chattel rules (plus the five‑thirds cap – see below).
What counts as a chattel for CGT?
Chattels are tangible, movable property (eg art, furniture, books, collectibles). An asset that isn’t a chattel is a personalised number plate: this is a right, not physical goods, so doesn’t benefit from the chattels exemption. A share in a company which represents a collection of rights is also not a chattel.
What is a ‘wasting asset’?
An asset with a predictable life of 50 years or less or anything regarded as machinery is a wasting asset; meaning gains on disposal are generally outside CGT. But beware machinery on which capital allowances could have been claimed – as this article doesn’t cover businesses, we won’t look at anything further on this here.
Typical examples of wasting assets include cars and motorbikes, racehorses, yachts (as long as they are in some way mechanically propelled), some firearms and even perishable food/drink like champagne if it’s truly for consumption (see more on wines and spirits below). Note that borderline items can require judgement; it’s important to keep notes showing how you used the asset.
What is the £6,000 chattel exemption and the five‑thirds rule?
If you sell a chattel for £6,000 or less, any gain is exempt from CGT; above that, a special cap can apply: your taxable gain is the lower of the actual gain and five‑thirds of the amount by which proceeds exceed £6,000. This gives relief where you sell a non-wasting asset at a price up to £15,000.
Anti‑avoidance applies to sets: you can’t break a set of chairs (or a case of wine) into multiple sub‑£6,000 sales to the same or connected buyers and achieve a pre-item price reduction when compared with selling the set or expect multiple exemptions.
Does intent matter for CGT on collectibles?
It can, yes. Buying an asset to use or play with suggests a finite life (wasting); buying an asset to preserve as a collectible points to a longer life and potential CGT on sale. HMRC’s guidance is quite guarded, so for example they say that “many models and toys have a predictable life exceeding 50 years”. This points to toys being seen by HMRC as collectibles.
It’s helpful to document your intention and actual use. You could add a line in your records at purchase (eg ‘Bought for personal use, played regularly’) and keep this as evidence to support the tax treatment if you later dispose of the asset.
Do I pay CGT and IHT if I gift items to family?
A gift to a connected person is treated as a market‑value disposal for CGT. For IHT, there’s no ‘wasting asset’ concept – assets in a person’s estate are generally valued at market value at the date of death, but this is a complex area and professional advice should be sought.
Most lifetime gifts are potentially exempt transfers (PETs), meaning they fall outside the donor’s estate for IHT if the donor survives seven years. Our other articles on gifting and PETs may be of interest:
- Family business succession planning.
- Gifting property to children: A guide.
- Gifting money to grandchildren.
Tax treatment by asset type: wine, classic cars, bloodstock, yachts and aircraft
Fine wine and spirits
CGT treatment hinges on longevity – HMRC say that the wasting asset rules “would certainly not apply to port and other fortified wines” since they “are generally recognised to have a very long storage life”.
Their position on fine wines is less clear. HMRC’s original 1999 guidance is clear: “we would normally contend that wine is not [their emphasis] a wasting asset if it appears to be fine wine which not unusually is kept (or some samples of which are kept) for substantial periods sometimes well in excess of 50 years”. But roll forward to 2026 and the ‘not’ is missing. Whether this is a deliberate change in policy or simply a typo is not clear; we have asked HMRC to clarify.
The £6,000 chattel exemption and the rules on sets of assets can still apply.
Classic cars
As they are machinery, generally considered to be wasting assets, meaning no CGT.
Bloodstock (racehorses)
Racehorses, like all animals, are treated as wasting assets. Remember, we are looking here at one-off’s and not where you are selling a racehorse as part of a business.
Yachts, ships and aircraft
The CGT treatment depends on mode of propulsion and use.
Mechanically propelled vessels and aircraft are typically wasting assets since they are machinery. Sailing‑only vessels are not, and so are not automatically treated as wasting, so you need to analyse the expected life to determine whether or not it’s a wasting asset. HMRC say that even large ocean-going yachts with auxiliary engines should be regarded as machinery.
Does business use change the tax position?
Yes. There was a notable case a few years ago where on its facts the sale of a piece of artwork used in a business for more than £9 million generated no CGT; that loophole has since been closed, and you shouldn’t expect to sell high‑value art tax-free even when used within the business.
How Saffery can help you prepare tax-efficient sales, gifts and collection disposals
If you’re considering a sale, gift, or restructuring of a collection, we can help you with the appropriate tax planning. Please get in touch with Mike Hodges for more information.
It’s important to note that this is general guidance and does not constitute tax advice. Outcomes depend on your circumstances, facts and current HMRC rules – please seek bespoke, professional advice before acting.
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