Lower CGT Thresholds for Valuable Collection

beatthebookienet

When I was younger I spent a lot of my money on growing a large collection of a certain collectible. Due to price changes, the value of my collection is now £50k+ and I am considering slowly selling it off on ebay to help pay for my first home deposit and mortgage overpayments.

The new CGT threshold being £6k and then £3k from next year has put a downer on this plan. I never anticipated that my personal collection could become liable to tax and I don't even have a record of all the prices which I paid since I bought most of the items 5+ years ago.

Would the best way around this be to slowly sell the collection off to keep the annual sales/profit under the new reduced thresholds?

I can't believe that this has been sneaked in so quietely without anyone batting an eyelid. The taxman going after the poorest in society during a cost of living and housing crisis, meanwhile the richest have had their pension pot allowance raised to £1.8 million

Jeremy535897

Presumably these items were originally purchased for personal enjoyment rather than to make a profit?

Assuming that is correct, the next question is whether the items are chattels. If they are, each chattel (or set of chattels where this is appropriate) can be sold for £6,000 without any capital gains tax arising. If you are married, you could also consider giving some to your spouse to sell. For the chattels exemption see:
https://www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/chattels-and-capital-gains-tax-2021-hs293

beatthebookienet

Jeremy535897 said:

Presumably these items were originally purchased for personal enjoyment rather than to make a profit?

Assuming that is correct, the next question is whether the items are chattels. If they are, each chattel (or set of chattels where this is appropriate) can be sold for £6,000 without any capital gains tax arising. If you are married, you could also consider giving some to your spouse to sell. For the chattels exemption see:
https://www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/chattels-and-capital-gains-tax-2021-hs293

The items were purchased for my personal collection/to relive my childhood and I assume that they come under the chattel classification. A change in demand/popularity lead to significant value increases in 2020.

I wasn't sure whether the CGT theshold applied to a single transaction or the total net gains over the year.

E.g. say that in a year I sell 200 collectible items individually to separate buyers on ebay for £100 each (total £20k in sales), and for arguments sake say that the total purchasing cost of these 200 items accumulated indivudually over the last 10 years came to £5k. Would that circa £15k net gain be liabale to CGT or not because no one item (or set) is over the current threshold of £6k?

Also I assume that regarding income tax, that since these items have been owned for over 12 months (some 5 years+), it would not be classed as short-term trading activity or an organised business operation seeking to make a profit, thus not liable to income tax?

Jeremy535897

If you sell 200 items on Ebay for £100 each, to different buyers, they can't be in a set so you could sell each one for £6,000 and not worry about capital gains tax. The £6,000 chattels exemption is entirely separate from the £6,000 annual exemption for 2023/24, and it applies to each chattel individually, as the link I posted earlier explains.

Where you might have a problem is persuading HMRC that you didn't buy them to make a profit. They do look at online selling platforms, particularly at people who have a business account rather than an ordinary private one. Putting an explanation in that you are sadly selling a long cherished collection to buy a house would be useful, but not if it would adversely affect the price you get.

Keep_pedalling

What items are we talking about? A lot of collectibles, toys, cards ect, are considered wasting assets and are not subject to CGT.

Jeremy535897

Keep_pedalling said:

What items are we talking about? A lot of collectibles, toys, cards ect, are considered wasting assets and are not subject to CGT.

There will be the well used children's toys that are only fit for the bin, but toys, cards, stamps etc that are owned throughout by collectors are most unlikely to be wasting assets. One exception is mechanical toys, which are always treated as wasting assets by HMRC:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76876

p00hsticks

beatthebookienet said:

I can't believe that this has been sneaked in so quietely without anyone batting an eyelid. The taxman going after the poorest in society during a cost of living and housing crisis, 

The poorest in society are hardly going to possess £50k of collectables though, are they.... 

Keep_pedalling

Jeremy535897 said:

Keep_pedalling said:

What items are we talking about? A lot of collectibles, toys, cards ect, are considered wasting assets and are not subject to CGT.

There will be the well used children's toys that are only fit for the bin, but toys, cards, stamps etc that are owned throughout by collectors are most unlikely to be wasting assets. One exception is mechanical toys, which are always treated as wasting assets by HMRC:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76876

Thanks for that, how the hell to you work out the gain on a collection you have built up over many years? I would imaging there have been a lot of small cash purchases and most people won’t keep those sort of records.

If the OP can find buyers in the next couple of days now would be a good time to sell a good chunk of them 

Jeremy535897

Keep_pedalling said:

Jeremy535897 said:

Keep_pedalling said:

What items are we talking about? A lot of collectibles, toys, cards ect, are considered wasting assets and are not subject to CGT.

There will be the well used children's toys that are only fit for the bin, but toys, cards, stamps etc that are owned throughout by collectors are most unlikely to be wasting assets. One exception is mechanical toys, which are always treated as wasting assets by HMRC:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76876

Thanks for that, how the hell to you work out the gain on a collection you have built up over many years? I would imaging there have been a lot of small cash purchases and most people won’t keep those sort of records.

If the OP can find buyers in the next couple of days now would be a good time to sell a good chunk of them 

You don't. Remember that each chattel can be sold for up to £6,000 without a capital gain becoming chargeable. If, as OP Has said, he sells them individually to separate buyers, the rule on sets cannot apply, so the only risk is that OP is regarded as trading, hence my suggestions about avoiding online business accounts.