What is a wasting asset?

Posted on 29th March 2022 by Streets - HMRC notices

A wasting asset is an asset which has a predictable life of 50 years or less. HMRC’s guidance is clear that when you dispose of an asset, you are required to estimate its predictable life based on the nature of the asset and your intended use of the asset when you originally acquired it.

Certain chattels are always treated as wasting assets, for example, plant or machinery. Such items will always be wasting assets. This rule applies no matter what the actual life of the item of plant or machinery proves to be.

The residual or scrap value of a wasting asset is the amount it will be worth at the end of its predictable life. Again, this has to be estimated by reference to the position as it was when the asset was acquired by the person making the disposal.

The owner of a wasting asset may incur additional expenditure which enhances the value of the asset. This will not affect the predictable life of the asset but may alter its scrap or residual value.

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