Capital games with capital gains inspired by the taxman and `Antiques Roadshow'

Capital games with capital gains inspired by the taxman and `Antiques Roadshow'

An earlier article in this series looked at capital gains tax (CGT) generally. Having had a request for more detail on what happens when the taxman watches the Antiques Roadshow, let's have a look at what happens when you sell "chattels".

The word sounds rather medieval. Is it something to do with barons selling off their daughters? No - but sell a chattel (defined as tangible, movable property) and you may end up with CGT on any gain arising.

There are a range of exemptions which can help cut your tax bill. When you sell the family car for a more sporty model, you are not taxed on any gain as cars are not chargeable assets - after all, you'd normally make a loss on a car, so no tax relief for the losses. This even covers vintage cars.

"Wasting" assets - anything with a predictable life of less than 50 years - are also outside the net. Anything mechanical tends to count as a wasting asset automatically.

This exemption can rather creatively be used to cover such things as clocks, watches, fine wine and even model railway engines. So that prized, boxed Hornby set from your childhood won't attract tax even if you sell it for tens of thousands of pounds. Of course, once again there is the drawback of no tax relief when you sell such things at a loss.

So what if Great Aunt Ethel leaves you a vase which you later discover is a Ming? Obviously it doesn't count as a wasting asset as it has survived hundreds of years already.

The next stage is an exemption for any item sold for pounds 6,000 or less. If the vase turns out to be worth more than pounds 6,000, then you are in the tax net - selling for pounds 10,000 when you inherited it at a value of pounds 2,000 would mean a taxable gain of pounds 7,500 (if we assume indexation - inflation - allowance of pounds 500). But a curious provision gives some relief: the gain is limited to five-thirds of the sale price less pounds 6,000.

In the case of the Ming vase sold for pounds 10,000, it means you would only pay tax on a gain of pounds 6,667. However, if you make a bad deal and buy something for pounds 6,000-plus and sell for less than that, there is some loss relief.

This pounds 6,000 limit might set you thinking when you are about to sell that canteen of antique cutlery. How about selling off every knife and fork to the same buyer and then claiming that each piece should warrant the pounds 6,000 exemption? Unlucky - the canteen is seen as a set and as such only has one exemption.

Similarly, if you were lucky enough to own a set of four Chippendale chairs you could only claim one exemption if you sold them to the same buyer. There is some scope for "lotting" them at auction, so that the set has four separate entries in the catalogue and perhaps encourages more than one buyer. The drawbacks of this is that a matching set is usually worth more than four single chairs - so the net result may be worse than selling as a set and taking the tax hit.

What is interesting is that a pair of objects, such as a set of duelling pistols, may not count as a set. Case law suggests that a set comprises three or more objects. Each pistol would get a separate pounds 6,000 exemption even if they were sold to the same buyer.

To go back to our Chippendale chairs, one way of mitigating CGT would be to transfer two of them to your (trustworthy) spouse, as transfers between couples do not attract a tax charge. Then each partner could separately sell their "pair" of chattels, perhaps each getting the pounds 6,000 exemption on their sale.

Clearly this "asset-splitting" has to be genuine and there may be a need to prove to the tax inspector that this was legitimate, with separate ownership established well before any sale and the monies received put into separate accounts under each spouse's name. Again, remember the power of the set - what gives the best result for tax purposes may not necessarily produce the best commercial result.

John Whiting is a tax partner at Price Waterhouse

Start your day with The Independent, sign up for daily news emails
Suggested Topics
Sport
sportGareth Bale, Carl Froch and Kelly Gallagher also in the mix for award
News
Japan's Suntory Beverage & Food has bought GlaxoSmithKline's Lucozade and Ribena
news
News
A tongue-eating louse (not the one Mr Poli found)
newsParasitic louse appeared inside unfilleted sea bass
Sport
Nathaniel Clyne celebrates after salvaging a point with the Southampton equaliser
footballAston Villa vs Southampton report
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
Out and about: for 'Glee' character Bert Hummel, having a gay son was a learning curve
lifeEven 'cool' parents need help parenting gay teens
News
peopleJack Monroe accuses David Cameron of 'misty-eyed rhetoric'
News
The illusionist believes hypnotism helped him to deal with the lack of control he felt growing up
people
News
Tana Ramsay gave evidence in a legal action in which her husband, Gordon, is accusing her father, Christopher Hutcheson, of using a ghost writer machine to “forge” his signature
peopleTana Ramsay said alleged discovery was 'extremely distressing'
Arts and Entertainment
Robin Windsor and Aljaz Skorjanec rehearse their same-sex dance together on Strictly Come Dancing
TV
Money
Anyone over the age of 40 seeking a loan with a standard term of 25 years will be borrowing beyond a normal retirement age of 65, and is liable to find their options restricted
propertyAnd it's even worse if you're 40
Arts and Entertainment
Perhaps longest awaited is the adaptation of Jack Kerouac’s On the Road with Brazil’s Walter Salles directing and Sam Riley, Kristen Stewart and Viggo Mortensen as the Beat-era outsiders
books
Arts and Entertainment
theatreSinger to join cast of his Broadway show after The Last Ship flounders at the box office
Life and Style
fashion'To start singing with Pharrell is not that bad, no?'
News
news
Finacial products from our partners
Property search
Sarah Bibby and Robert Allinson, with their children Charlotte and Ethan, confronted the ‘difficult’ questions’ posed by making a will

Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will

Your children have it all, your partner gets nothing

Halfords is gearing up for Christmas

Bargain Hunter: Find the deals that have real value beneath the Black Friday hype

Halfords is gearing up for Christmas

Fields of dreams: venture capital trusts help young companies to grow, potentially delivering big returns for investors

Mark Dampier: You take a chance but VCTs have sorted the wheat from the chaff

Fields of dreams: venture capital trusts help young companies to grow, potentially delivering big returns for investors 

The FCA has imposed £1.1bn in fines on five banks over forex trading practices

Simon Read: Catch 22 for borrowers who are turned down by banks

There are many reasons for people to turn to high-cost credit, but being turned down by their banks for a loan is one

The battle between the banks to attract more current account customers moved up a level this week when Yorkshire Bank (and Clydesdale Bank) launched a market- leading £150 switching incentive.

Money Insider: Would £150 make you switch banks?

The £150 incentive from Yorkshire and Clydesdale runs from now until 28 February next year, but you must use the official Current Account Switching Service (CASS) and close your existing account to qualify

The short slope that takes women all the way down to living on the streets

For the rising number of homeless women, the struggle is compounded by health problems and by losing their children

If you’ve got a card in your wallet that charges a low standard interest rate, there’s less financial impact if you can’t repay your full statement balance.

Money Insider: Save money with the right credit card

Research from Sainsbury’s Bank Credit Cards this week revealed that 15 per cent of people making a large purchase on their plastic didn’t use one with 0 per cent interest on purchases

Last week was hangover time, when Stock Spirits, a vodka producer, distilled a profit warning that sent its shares crashing more than 25 per cent. (image: Rex Features)

No Pain No Gain: Vodka causes a hangover as shares in Stock Spirits slump

Last week was hangover time, when Stock Spirits, a vodka producer, distilled a profit warning that sent its shares crashing more than 25 per cent

Investment melting pot: the price of gold may have fallen but Artemis Strategic Assets believes its value cannot be debased

Mark Dampier: Strong returns can be found if you go the opposite way to the crowds

Investment melting pot: the price of gold may have fallen but Artemis Strategic Assets believes its value cannot be debased

The Bank of England announced that interest rates will stay at 0.5 per cent

Simon Read: Banks can’t blame the economy for their low rates

Interest rates are currently as low as 0.1 per cent

The schemes work by using collective power to negotiate better deals with gas and electricity suppliers

Simon Read: Don’t blow a fuse with your energy supplier, just switch

The energy watchdog Ofgem has slammed Scottish Power, while Citizens Advice reports a string of complaints about it

John Lush from Hampshire got into debt with payday lenders and had the help of a debt management charity to clear the £20,000 he owed

Simon Read: The only place for debt is out in the open, don't be afraid to ask for advice

John Lush from Hampshire got into debt with payday lenders and had the help of a debt management adviser to clear the £20,000 he owed

Seven Families campaign aims to raise awareness of financial damage caused by illness or disability

The campaign is handing financial help to seven families for a year, along with support and advice in how to get their careers back on track
The 10th birthday of broadband in Britain was marked with a projection in 2010. But the infrastructure is still being rolled out

Families pay the price of superfast broadband

Bills are going up for households around the UK as providers invest in better infrastructure. Emma Lunn explains why - and what to do

How to cut the cost of car insurance: A five-step guide to getting a better deal

Premiums are on the rise again but motorists don't have to take a back seat on the price of their cover, says Rob Griffin
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Argyll Scott International: Risk Assurance Manager

    Negotiable: Argyll Scott International: Hi All, I'm currently recruiting for t...

    Argyll Scott International: Business Analyst - MGA - London Market - Insurance Broker

    £50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...

    Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

    £30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

    Selby Jennings: C++ Developer – Hedge Fund – New York

    $80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible