Selling personal possessions can incur Capital Gains Tax
If you sell “things” you own personally at a large profit then you could find you are hit with a large bill from the taxman for Capital Gains Tax.
For individuals like you and me this can be between 10% and 28% of the profit, depending on what you are selling and whether or not you are a higher rate taxpayer.
But is there such an animal as a tax-free capital gain?
Actually, there is, as each and every UK resident taxpayer is allowed to make gains of up to £12,300 without paying any tax during the current tax year to 5th April 2022.
Additionally, some items are classed as personal possessions, and provided they are sold for amounts below £6,000 then you won’t generally have to pay any tax on these either.
For this purpose, the following items are classed as personal possessions:-
- Coins and Stamps
- Sets of things, e.g. matching vases or chessmen
You’ll still need to calculate each gain to find out whether you need to pay tax and as with most things involving tax this isn’t quite as simple as it seems!
For example, if you sell a personal possession which fetches between £6k and £15K then you subtract £6k from the amount you sold it for, multiply it by 1.667, and compare it with the number you first thought of! Well not quite, but as you can see, HMRC can find a way to complicate any tax calculation……..!
Give us a call if you are worried this may affect you as better safe than sorry.
You won’t need to pay C G T:
- On gifts to your husband, wife, civil partner or a charity
- When you sell your car, unless you have used it in your business
- On anything with a limited lifespan such as household furniture
- On sales of investments held within ISAs and SIPPs
- When you sell UK government gilts
- When you have a big win on the Premium Bonds (I know, chance would be a fine thing but some people must be winning the big prizes!)
- On any winnings from betting, lotteries and the pools
Of course, your own home can also generally be sold without you having to pay any Capital Gains Tax provided:-
- You have not let it out, even in part
- You have not elected for another property to be your “principal private residence” for tax purposes whilst you have owned it.
Further tax matters to consider:
- Generally no Capital Gains Tax will apply when you inherit an asset; you will just acquire it at market value. But if you later sell it at a profit over that value then all the usual rules will apply.
- You may have to pay Capital Gains Tax even if the asset you sell is located overseas, for example, if you sell a property situated in France. This doesn’t always apply though so you’d be best to call us if you need specific advice.
- If you are not considered “resident in the UK” by the taxman you may still have to pay Capital Gains Tax if you sell residential property that’s situated in the UK. However, you don’t have to pay Capital Gains Tax on other things in the UK (such as shares in UK companies)provided you don’t return to the UK within 5 years of leaving.
Need advice and help with your capital gains tax?
At THP, we have a number of experienced tax experts on hand ready to help you with all matters involving this complex tax. It’s often far better to take advice at the point you acquire an asset than when you come to sell it. By planning and structuring the purchase correctly it’s often possible to retain more of the proceeds when you come to sell rather than hand a large chunk of change over to HMRC. Contact THP Chartered Accountants today to learn more about capital gains tax planning and inheritance tax planning. Our accountancy branches are located in Wanstead, Cheam, Chelmsford and Saffron Walden.
About Karen Jones
Having worked for one of the world’s largest accountancy firms, Karen Jones uses her tax knowledge and skills to help clients obtain substantial reductions to their tax liabilities.
With an expanding portfolio of tax clients, Karen enjoys the variety her work brings her and particularly likes working with new businesses and people. With a growing number of tax clients, she frequently faces a variety of challenges and relishes the experience she gains as she solves them.
Karen likes the THP ethos: “I like the way the team has a professional, but friendly and down-to-earth approach – it creates a productive atmosphere that benefits everyone.”
Karen’s specialist skills:
- Personal Taxation
- Tax Efficient Planning
- Trust Administration