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Treatment of wasting assets

C2.901 Wasting assets—overview

A wasting asset is defined for capital gains purposes as an asset with a predictable life not exceeding 50 years¹. A wasting asset is likely to become less valuable over its predictable life. At the end of that life, it will have only a scrap or residual value.

The significance of an asset being a wasting asset is as follows:

1. Ìý

   •ÌýÌýÌýÌý If the asset is a chattel (ie it is tangible movable property) it is generally exempt. No chargeable gain or allowable loss accrues on the asset's disposal. There are exceptions to this rule, in particular for assets on which capital allowances have been, or could have been, claimed. See C2.901A.

2. Ìý

   •ÌýÌýÌýÌý If the asset is not exempt, there is a restriction in the amount of expenditure allowed in calculating the chargeable gain or allowable loss. Broadly, acquisition expenditure is written off over the asset's predictable life. Enhancement expenditure is written off over the period