Check how to work out the profit on personal possessions (chattels) when you dispose of them or sell them. You can then calculate how much Capital Gains Tax (CGT) you may need to pay.
PERSONAL POSSESSIONS: You need to calculate the total amount of profit on personal possessions for Capital Gains Tax.
The amount of gain is the difference between the purchase price and the selling price for the item.
As a rule, Capital Gains Tax is chargeable if you sell or dispose of certain personal possessions, also called chattels, for £6,000 or more and it produces a gain (financial profit).
You might need to work out the gain to determine whether Capital Gains Tax is due on these common chattels or personal possessions:
Generally, tax does not need paying on gifts to your spouse, civil partner, or a charity. Individuals do not pay CGT on:
You might own chattels or a personal possession with other people. If so, you will be exempt from paying gains tax on the first £6,000 of your share.
The gain is the subtracted difference between what you paid for personal possessions and the amount you sold them for. But, there may be times you need to use the market value instead, such as when:
You may be able to deduct some costs from a gain when purchasing, improving, or selling a personal possession. Contact HM Revenue and Customs (HMRC) any time you are unsure whether you can deduct a certain cost. Cost deductions include:
Note: You cannot deduct costs for interest on a loan used to buy a personal possession. The same rule applies to costs claimed as expenses (if used for business purposes).
You may be able to reduce your gain if you got between £6,000 and £15,000 for your possession when you sold it or 'disposed of' it.
Once you have determined the gain, the next step is working out if you need to report and pay Capital Gains Tax.
Note: You might be able to reduce or delay the tax you pay if you have used your possession for business and you are eligible for tax relief.
There is a different set of rules for reporting a loss. You can claim losses for possessions which got sold for less than £6,000. The method of working out a loss uses £6,000 as the amount you sold your possession for. You can then report this figure in your tax return.
There is no need to pay Capital Gains Tax on personal possessions if they have a lifespan of less than fifty (50) years. Besides machinery, it also includes items such as watches or antique clocks.
Different rules apply if you have used the possession for trading in the business. Capital Gains Tax is not due if it does not qualify for business capital allowances relief. But, you may need to pay tax if it qualifies and you cannot claim the losses.
You will not be liable for Capital Gains Tax if you sell part of a set, or a complete set, to the same person for less than £6,000. You will not pay tax on each separate part of a set sold for less than £6,000 either. That is providing you sell the parts of a set to different people.
Note: Sets of personal possessions can include things like books written by the same author, chessmen, and matching sets (e.g. china, glassware, or vases).
Capital Gains Tax on Personal Possessions for the United Kingdom