Well if they charge capital gains tax on a profit then they must allow a loss, but as far as I'm aware there's a big problem with that, as below.
Anyway, say you bought a plate for £10k, and sold it for £40k.
That's £30k in capital gains. But you get a yearly allowance, which is currently around £10k, so you'd only pay tax on £20k. There's also an adjustment for inflation (called indexation) because if the price of a plate rises only slowly you're not really any better off due to prices and wages rising anyway.
However, the problem with a loss on a plate is that (as I recall it) the losses can only be used against other capital gains.
So say you lost £50k on a plate but made £80k selling some shares
. You could use the loss on the plate against the gain on the shares, so your net gain would only be £30k.
And with your £10k yearly allowance this means that your taxable gains would only be £20k.
However, the problem is that the average taxi driver doesn't normally have much in the way of capital gains, so any loss on a plate couldn't be used against something else. I think the losses can be carried forward for a few years, but perhaps not indefinitely, but again the average cab driver may never have any capital gains to set the loss on the plate against.
And the only capital gain that many a cabbie may have - that on the sale of a house - isn't subject to capital gains tax anyway, since it's normally their main residence (if they owned a couple of houses then they'd be subject to capital gains on the other one. That was what the MPs were up to with their 'flipping' and the like - they were trying to change which house was their main residence so that they could avoid paying the CGT).
Anyway, the gain or loss normally only becomes relevant when the plate is sold - paper profits or losses in the years inbetween aren't relevant.
However, I was just wondering if a loss might arise (or 'crystallise', to use the jargon) if delimitation took place, even if the plate is retained by the vehicle proprietor.
I think the rules are that if an asset loses its value permanently then the loss can be claimed even if the asset is retained and not sold or otherwise disposed off (for example, if you had shares in a company which went bankrupt and the shares became worthless). Not sure how that might apply to HC licences, but it's an interesting thought.
But again the problem might be finding a capital gain to set the loss on the plate against.
Anyway, I think that's basically it in a nutshell, but anyone requiring the full ins and outs should of course seek professional advice.