HMRC limits chattel sets to similar items worth more together

A set of chattels disposed of in pieces is taxed as a single asset with a single £6,000 limit when the ownership and disposal conditions are met.GOV The articles must have been owned by one person at the same timeLegislation and disposed of by that person, whether on the same or on different occasionsGOV, to one other person acting alone, to several persons acting in concert, or to several persons who are connected personsGOV. Where that pattern is present, the separate disposals are treated as one transaction disposing of one assetLegislation, so splitting a valuable set into individual sales of £6,000 or less does not secure a separate exemption for each saleGOV. A set can consist of two or more articles.

The new guidance adds a definition of when articles form a set in the first place.GOV The special set rules apply only to a set of chattels, meaning tangible moveable property.GOV The dictionary sense of a set — things that belong together because they are essentially similar or complementary — is not enough on its own.GOV HMRC takes the view that articles form a set for chargeable gains purposes only if they are both essentially similar and complementary and their value together is greater than the sum of their individual values.GOV Seats in a cinema or theatre illustrate the boundary: they are similar to each other but they are not a set for these purposes.

Two practical points follow from that test. The fact that chattels were sold as one lot at auction, or were all disposed of to the same person or persons, does not by itself prove they comprised a set.GOV Conversely, a large collection that as a whole fails the test can still contain smaller groups that pass itGOV. Where such smaller sets can be identified, and the ownership and disposal conditions are otherwise satisfied, each small set is treated as a single asset in its own right.GOV

The guidance also addresses two mechanics. Where apportionment is needed, for example to allocate consideration or relief between parts of a set, it is made under the just and reasonable apportionment rule. On acting in concert, HMRC gives the example of dealers acting together as a ring at an auction. Where persons who are not connected have simply bought together without evidence of a prior agreement to act together to acquire the assets that formed the set, the mere fact of joint acquisition is not enough to treat them as acting in concert.GOV

The £6,000 figure remains the per-transaction threshold described in the connected guidanceGOV: the exemption applies where consideration for the disposal of a chattel does not exceed £6,000Legislation. Once a set is identified and the single-transaction treatment applies, only one £6,000 limit is available for the set as a whole.GOV

Legal basis: Taxation of Chargeable Gains Act 1992, sections 52(4) and 262, as explained in HMRC Capital Gains Manual CG76631.