Capital gains, Property, zero or low income.

singhini

i am getting confused, your right.
The link you sent suggests to me items are chattel when they are touchable and moveable........ i.e. jewellery then!

Bookworm105

singhini said:

i am getting confused, your right.
The link you sent suggests to me items are chattel when they are touchable and moveable........ i.e. jewellery then!

it all comes down to whether your £10,000 of jewellery comprises several pieces sold individually or one set of items which comprise a defined collection (not just a number of individual pieces sold in one single transaction)

assuming it is not a "collection", then your capital tax payable would be:
sales proceeds 10,000 - purchase cost £0 (no evidence to support a figure) - selling costs £TBC = gain 10,000
Tax payable on gain (10) - allowance (3) = £7,000 @ 10% = £700 tax to be paid 

You must report that tax position by the 31st December after the tax year in which you made the gain, and pay that tax by the following 31 January. For example: gain made in 23/24, report by 31 Dec 24 and pay by 31 Jan 25.

for scenario 2 you need documentary evidence of what you paid to buy the jewellery. A bank statement showing the amount paid is not good enough on its own, you nee the original invoice/receipt which names the item purchased and what it cost

it may seem harsh that someone with no/little income ends up paying tax anyway but that is the nature of income tax and capital tax operating on totally separate sources of wealth. You can have no income but millions in assets and still end up paying tax on those assets if you sell them 

singhini

@Bookworm105
Thankyou for explaining it clearly and with a working example :thumbsup: 

Jeremy535897

Bookworm105 said:

singhini said:

i am getting confused, your right.
The link you sent suggests to me items are chattel when they are touchable and moveable........ i.e. jewellery then!

it all comes down to whether your £10,000 of jewellery comprises several pieces sold individually or one set of items which comprise a defined collection (not just a number of individual pieces sold in one single transaction)

assuming it is not a "collection", then your capital tax payable would be:
sales proceeds 10,000 - purchase cost £0 (no evidence to support a figure) - selling costs £TBC = gain 10,000
Tax payable on gain (10) - allowance (3) = £7,000 @ 10% = £700 tax to be paid 

You must report that tax position by the 31st December after the tax year in which you made the gain, and pay that tax by the following 31 January. For example: gain made in 23/24, report by 31 Dec 24 and pay by 31 Jan 25.

for scenario 2 you need documentary evidence of what you paid to buy the jewellery. A bank statement showing the amount paid is not good enough on its own, you nee the original invoice/receipt which names the item purchased and what it cost

it may seem harsh that someone with no/little income ends up paying tax anyway but that is the nature of income tax and capital tax operating on totally separate sources of wealth. You can have no income but millions in assets and still end up paying tax on those assets if you sell them 

It would be very surprising if a collection of jewellery was a set, as defined in the link I sent you. That applies more where the set is worth more than the individual items. An often quoted example is selling a rare set of chess pieces one by one. Individually they are worth very little.
If there is no collection, I don't believe that any tax is payable, unless a single piece of jewellery is sold for more than £6,000.

mrodent33

At the risk of being shown to be very naive (not for the first time).

My understanding of the CGT allowance is

Tax year 2023-24: £6000

Tax year 2024-25 (CURRENT tax year): £3000

This is shown here.

Re the linked page in the previous post: I strongly recommend reading the small print at the bottom: "You’re exempt from paying tax on the first £6,000 of your share if you own a possession with other people." 

I really have no idea what that means.

Jeremy535897

mrodent33 said:

At the risk of being shown to be very naive (not for the first time).

My understanding of the CGT allowance is

Tax year 2023-24: £6000

Tax year 2024-25 (CURRENT tax year): £3000

This is shown here.

Re the linked page in the previous post: I strongly recommend reading the small print at the bottom: "You’re exempt from paying tax on the first £6,000 of your share if you own a possession with other people." 

I really have no idea what that means.

You are mixing up two exemptions.
1. The annual exemption, used against any gains, which is £3,000 for 2023/24, and was £6,000 for 2022/23.
2. The chattels exemption, which means that a chattel (jewellery, pictures, basically tangible movable property) that is sold for £6,000 or less is deemed to have a cost equal to its sale proceeds, so there is no gain. You can't split up an obvious set and sell it in separate bits and treat each bit as a separate chattel, but unrelated jewellery accumulated over years is not a set. If you jointly own a chattel equally with someone else, then even if it sells for £12,000 there is no tax to pay (the meaning of the phrase you put in bold above), because your share of it is £6,000 or less.

Bookworm105

Jeremy535897 said:

If there is no collection, I don't believe that any tax is payable, unless a single piece of jewellery is sold for more than £6,000.

ok my post has been clarified