Taxation of Chargeable Gains Act 1992 section 47

Wasting assets qualifying for capital allowances

Section 47 disapplies the straight-line restriction on allowable expenditure (under section 46) for wasting assets that qualify, in whole or in part, for capital allowances, and sets out how the gain computation is split when the asset has only partly qualified.

• Where a wasting asset has been used solely for a trade, profession or vocation throughout the owner's period of ownership and has qualified (or could have qualified) for capital allowances, the section 46 straight-line write-down of allowable cost does not apply.
• Where the asset has been used partly for trade purposes and partly for non-trade purposes, or has only partly qualified for capital allowances, the disposal proceeds and the allowable expenditure must be apportioned between the qualifying and non-qualifying parts.
• Two separate gain computations are then performed: the trade-use (capital allowances) part is computed without the section 46 wasting asset restriction, while the non-trade part remains subject to it.
• If an apportionment of the disposal proceeds has already been made for capital allowances or balancing charge purposes, that same apportionment must be used; otherwise, the proceeds are split in the same proportions as the expenditure.