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Gingering up

It is reported that Chris Evans has taken advantage of what has been described as a "Capital Gains Tax loophole" by selling all or part of his classic car collection to fund the purchase of a rare Ferrari. This is of course because of the widely-known CGT exemption which applies to gains made on motor cars, so nothing surprising there; but it's worth mentioning the much less widely-known "chattel exemption".

The law provides that any "chattel" (meaning an item of tangible moveable property) which is owned as an investment asset is exempt from CGT if it is a wasting asset. And, crucially, any item of "machinery" is deemed to be a wasting asset. As a result CGT exemption does not apply only to classic car collections but also to any collection (or single item, come to that) of things which may be regarded as "machinery". That is a very wide term: as HMRC say:

"The meaning of the word "machinery" should not cause you any problems. Machinery includes machines and the working parts of machines. A machine usually has moving parts. Assets like motor vehicles and lathes are machines. Computers and similar electronic devices are also machinery. You may find machinery in places where you might not expect it. For example, door handles with moving parts are machinery"

The point to bear in mind is that "machinery" does not stop being "machinery" because it no longer works, or is very old, or has acquired intrinsic or investment value. As well as extending to obvious things like vehicles and sewing machines the scope is much wider: clocks and watches are machines; so too are many musical instruments.

Perhaps, with the imminent introduction of higher rates of CGT , we shall see a boom in the investment market for these oddly tax-favoured assets...