Selling an heirloom? Watch out for the tax bill
Selling heirlooms that people would otherwise have kept is becoming increasingly popular; fuelled in part by a growing interest in shows like 'Antiques Roadshow'. But there's a warning to those who sell 'assets from the attic'; they could be in for a nasty tax bill.
Selling items like jewellery, paintings and antiques will incur a rate of 18 per cent or 28 per cent Capital Gains Tax (depending on your rate of taxable income), if they are sold for more than £6,000.
With a marked increase in the new wealthy from emerging markets like China and Russia keen to buy back artefacts from their country, prices of items from these are cultures are rising to previously unseen levels.
Helen Mackenzie, a partner in chartered accountants Chiene & Tait, told the Telegraph: "The lesson here is that anyone contemplating the sale of a valuable asset should carefully consider the tax implications. There are simple steps that can be taken to mitigate CGT. Before rushing out to sell an item for thousands of pounds, independent advice should be sought to help limit the slice taken by the taxman."
How to mitigate CGT1. Make CGT-exempt inter-spouse transfers. If you own the item jointly, between husband and wife or members of a civil partnership, you can make use of both your individual allowances, doubling the amount you can sell an item for without being subject to CGT.
2. If you plan carefully, you can make the sale across two tax years, enabling you to use each tax year's annual exemption.
3. Some types of asset are free of CGT - these are known as 'wasting assets' - or an item with a predictable life of 50 years or less. You estimate the life based on the condition of the item when you originally acquired it. Things like antique clocks, watches, guns, wine and spirits and vintage cars are all included in this category.
4. Remember that selling sets of items have slightly different rules. For instance a set of books by the same author or a pair of vases - are considered to be worth more together than separately and are subject to the £6,000 limit as a whole set. Selling parts of a set to the same person in separate sales will still mean you can not make more than £6,000 on all those sales without paying CGT.