Selling a personal collection - Capital gains ..

johnnytwoeyes

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .


Any help would be appreciated . 

Jeremy535897

In general, chattels are exempt if each chattel is sold for less than £6,000. There are some rules about sets, but they apply where the whole is worth more than the sum of its parts (for example a chess set). See:
https://www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/personal-possessions-and-capital-gains-tax-2024-hs293
Watches are exempt as you say: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76904
Were any of the instruments he bought treated as trading stock of his business? If so, then they would be treated as sold at market value at the point he ceases to trade or, if earlier, when he appropriates them for private use only..

johnnytwoeyes

Jeremy535897 said:

In general, chattels are exempt if each chattel is sold for less than £6,000. There are some rules about sets, but they apply where the whole is worth more than the sum of its parts (for example a chess set). See:
https://www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/personal-possessions-and-capital-gains-tax-2024-hs293
Watches are exempt as you say: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76904
Were any of the instruments he bought treated as trading stock of his business? If so, then they would be treated as sold at market value at the point he ceases to trade or, if earlier, when he appropriates them for private use only..

thanks again  

DullGreyGuy

johnnytwoeyes said:

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .

He repairs / restores to resell brass / woodwind instruments as a soletrader ,  over the last 30 odd years he has bought musical  instruments for himself to play and because he enjoys owning them .

  He is now coming up to his 70th birthday and arthritis has taken hold and looking down size and sell most of the items he has collected but is concerned about the tax implications in doing so .

He was told that it should be ok as long as it is under the capital gains but I am not too sure as it is something he traded in and most were bought / given privately from other repairers collectors who passed away .

He also has a watch collection which I have read should be ok as it not something he "dealt in " and is classed as "limited Lifespan" . 

It's messy, to say the least and problems of blending pleasure and work. 

You say some were traded in? Was that for services rendered? If he charged £100 plus an instrument for work that he'd have otherwise charged £600 for how did he declare it? Presumably he was doing cash accounting?

I think there are two questions here... has he actually retired or is he just closed for new business and running off the business so this is really an income tax matter or, if not, is he just liquidating his personal assets and therefore potentially a CGT matter. CGT typically applies per item not per year however there are different rules on collections

johnnytwoeyes

DullGreyGuy said:

johnnytwoeyes said:

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .

He repairs / restores to resell brass / woodwind instruments as a soletrader ,  over the last 30 odd years he has bought musical  instruments for himself to play and because he enjoys owning them .

  He is now coming up to his 70th birthday and arthritis has taken hold and looking down size and sell most of the items he has collected but is concerned about the tax implications in doing so .

He was told that it should be ok as long as it is under the capital gains but I am not too sure as it is something he traded in and most were bought / given privately from other repairers collectors who passed away .

He also has a watch collection which I have read should be ok as it not something he "dealt in " and is classed as "limited Lifespan" . 

It's messy, to say the least and problems of blending pleasure and work. 

You say some were traded in? Was that for services rendered? If he charged £100 plus an instrument for work that he'd have otherwise charged £600 for how did he declare it? Presumably he was doing cash accounting?

I think there are two questions here... has he actually retired or is he just closed for new business and running off the business so this is really an income tax matter or, if not, is he just liquidating his personal assets and therefore potentially a CGT matter. CGT typically applies per item not per year however there are different rules on collections

sorry when I said "traded in"  I meant in regard to his work (trade)  rather than an item being traded in exchange or way of payment.  All of his actual business stock is itemised which he submits to his accountant every tax year  . It is his personal items which he has collected/ been given over the years he is looking to sell to fund his retirement /move. 

Jeremy535897

johnnytwoeyes said:

Jeremy535897 said:

In general, chattels are exempt if each chattel is sold for less than £6,000. There are some rules about sets, but they apply where the whole is worth more than the sum of its parts (for example a chess set). See:
https://www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/personal-possessions-and-capital-gains-tax-2024-hs293
Watches are exempt as you say: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76904
Were any of the instruments he bought treated as trading stock of his business? If so, then they would be treated as sold at market value at the point he ceases to trade or, if earlier, when he appropriates them for private use only..

Thanks , quite a few were bought with his personal savings ,  some given to him as presents and others from when he was in his 20s pre business .. When you say each chattels is sold for less than 6k , is this per item rather than total and is that per year ? 

 Only a few items in his collection is over 6k  but he has around 40 - 60 instruments ..

thanks again  

If It is per item, and that is not capped, so it isn't necessary to split sales between years, although each year he also has his annual £3,000 capital gains tax exemption (which might be relevant for an instrument sold for over £6,000). If he sold 30 instruments for £5,999 each there would be no tax, unless some were part of a set as explained in the link I gave.
The watches can be ignored entirely, as they are exempt as wasting assets that weren't part of a business.

DullGreyGuy

johnnytwoeyes said:

DullGreyGuy said:

johnnytwoeyes said:

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .

He repairs / restores to resell brass / woodwind instruments as a soletrader ,  over the last 30 odd years he has bought musical  instruments for himself to play and because he enjoys owning them .

  He is now coming up to his 70th birthday and arthritis has taken hold and looking down size and sell most of the items he has collected but is concerned about the tax implications in doing so .

He was told that it should be ok as long as it is under the capital gains but I am not too sure as it is something he traded in and most were bought / given privately from other repairers collectors who passed away .

He also has a watch collection which I have read should be ok as it not something he "dealt in " and is classed as "limited Lifespan" . 

It's messy, to say the least and problems of blending pleasure and work. 

You say some were traded in? Was that for services rendered? If he charged £100 plus an instrument for work that he'd have otherwise charged £600 for how did he declare it? Presumably he was doing cash accounting?

I think there are two questions here... has he actually retired or is he just closed for new business and running off the business so this is really an income tax matter or, if not, is he just liquidating his personal assets and therefore potentially a CGT matter. CGT typically applies per item not per year however there are different rules on collections

sorry when I said "traded in"  I meant in regard to his work (trade)  rather than an item being traded in exchange or way of payment.  All of his actual business stock is itemised which he submits to his accountant every tax year  . It is his personal items which he has collected/ been given over the years he is looking to sell to fund his retirement /move. 

Sound like the same thing... its a business asset as he bought it as stock/materials irrespective if he offset it against a bill or paid cash for it. 

johnnytwoeyes

DullGreyGuy said:

johnnytwoeyes said:

DullGreyGuy said:

johnnytwoeyes said:

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .

He repairs / restores to resell brass / woodwind instruments as a soletrader ,  over the last 30 odd years he has bought musical  instruments for himself to play and because he enjoys owning them .

  He is now coming up to his 70th birthday and arthritis has taken hold and looking down size and sell most of the items he has collected but is concerned about the tax implications in doing so .

He was told that it should be ok as long as it is under the capital gains but I am not too sure as it is something he traded in and most were bought / given privately from other repairers collectors who passed away .

He also has a watch collection which I have read should be ok as it not something he "dealt in " and is classed as "limited Lifespan" . 

It's messy, to say the least and problems of blending pleasure and work. 

You say some were traded in? Was that for services rendered? If he charged £100 plus an instrument for work that he'd have otherwise charged £600 for how did he declare it? Presumably he was doing cash accounting?

I think there are two questions here... has he actually retired or is he just closed for new business and running off the business so this is really an income tax matter or, if not, is he just liquidating his personal assets and therefore potentially a CGT matter. CGT typically applies per item not per year however there are different rules on collections

sorry when I said "traded in"  I meant in regard to his work (trade)  rather than an item being traded in exchange or way of payment.  All of his actual business stock is itemised which he submits to his accountant every tax year  . It is his personal items which he has collected/ been given over the years he is looking to sell to fund his retirement /move. 

Sound like the same thing... its a business asset as he bought it as stock/materials irrespective if he offset it against a bill or paid cash for it. 

sorry again for the confusion , when I say "traded in " not taken in trade but they type of trade he deals with ( if that makes sense) .. most of his guitars were bought before he had started buying and selling , gifts , car boots at the time time they were not valuable but over time they have increased quite a bit ..  He does not have an recepits for any of his personal guitars which is what he is concerened about when coming to sell. 

Bookworm105

johnnytwoeyes said:

DullGreyGuy said:

johnnytwoeyes said:

DullGreyGuy said:

johnnytwoeyes said:

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .

He repairs / restores to resell brass / woodwind instruments as a soletrader ,  over the last 30 odd years he has bought musical  instruments for himself to play and because he enjoys owning them .

  He is now coming up to his 70th birthday and arthritis has taken hold and looking down size and sell most of the items he has collected but is concerned about the tax implications in doing so .

He was told that it should be ok as long as it is under the capital gains but I am not too sure as it is something he traded in and most were bought / given privately from other repairers collectors who passed away .

He also has a watch collection which I have read should be ok as it not something he "dealt in " and is classed as "limited Lifespan" . 

It's messy, to say the least and problems of blending pleasure and work. 

You say some were traded in? Was that for services rendered? If he charged £100 plus an instrument for work that he'd have otherwise charged £600 for how did he declare it? Presumably he was doing cash accounting?

I think there are two questions here... has he actually retired or is he just closed for new business and running off the business so this is really an income tax matter or, if not, is he just liquidating his personal assets and therefore potentially a CGT matter. CGT typically applies per item not per year however there are different rules on collections

sorry when I said "traded in"  I meant in regard to his work (trade)  rather than an item being traded in exchange or way of payment.  All of his actual business stock is itemised which he submits to his accountant every tax year  . It is his personal items which he has collected/ been given over the years he is looking to sell to fund his retirement /move. 

Sound like the same thing... its a business asset as he bought it as stock/materials irrespective if he offset it against a bill or paid cash for it. 

sorry again for the confusion , when I say "traded in " not taken in trade but they type of trade he deals with ( if that makes sense) .. most of his guitars were bought before he had started buying and selling , gifts , car boots at the time time they were not valuable but over time they have increased quite a bit ..  He does not have an recepits for any of his personal guitars which is what he is concerened about when coming to sell. 

to summarise
he traded (worked) as a musical instrument dealer/repairer business
he purchased stock for that business - his accountant is on top of that

he also received musical instruments either as free gifts or he paid for them. All these are held as a private collection, they are not stock for his business
None of the personal items were received by him in exchange for him doing work for the donor, or in other words: "traded in" (part exchange) for such work 

johnnytwoeyes

Bookworm105 said:

johnnytwoeyes said:

DullGreyGuy said:

johnnytwoeyes said:

DullGreyGuy said:

johnnytwoeyes said:

Can anyone give some advice on behalf of a friend who is looking to retire in a couple years concerning capital gains on personal items .

He repairs / restores to resell brass / woodwind instruments as a soletrader ,  over the last 30 odd years he has bought musical  instruments for himself to play and because he enjoys owning them .

  He is now coming up to his 70th birthday and arthritis has taken hold and looking down size and sell most of the items he has collected but is concerned about the tax implications in doing so .

He was told that it should be ok as long as it is under the capital gains but I am not too sure as it is something he traded in and most were bought / given privately from other repairers collectors who passed away .

He also has a watch collection which I have read should be ok as it not something he "dealt in " and is classed as "limited Lifespan" . 

It's messy, to say the least and problems of blending pleasure and work. 

You say some were traded in? Was that for services rendered? If he charged £100 plus an instrument for work that he'd have otherwise charged £600 for how did he declare it? Presumably he was doing cash accounting?

I think there are two questions here... has he actually retired or is he just closed for new business and running off the business so this is really an income tax matter or, if not, is he just liquidating his personal assets and therefore potentially a CGT matter. CGT typically applies per item not per year however there are different rules on collections

sorry when I said "traded in"  I meant in regard to his work (trade)  rather than an item being traded in exchange or way of payment.  All of his actual business stock is itemised which he submits to his accountant every tax year  . It is his personal items which he has collected/ been given over the years he is looking to sell to fund his retirement /move. 

Sound like the same thing... its a business asset as he bought it as stock/materials irrespective if he offset it against a bill or paid cash for it. 

sorry again for the confusion , when I say "traded in " not taken in trade but they type of trade he deals with ( if that makes sense) .. most of his guitars were bought before he had started buying and selling , gifts , car boots at the time time they were not valuable but over time they have increased quite a bit ..  He does not have an recepits for any of his personal guitars which is what he is concerened about when coming to sell. 

to summarise
he traded (worked) as a musical instrument dealer/repairer business
he purchased stock for that business - his accountant is on top of that

he also received musical instruments either as free gifts or he paid for them. All these are held as a private collection, they are not stock for his business
None of the personal items were received by him in exchange for him doing work for the donor, or in other words: "traded in" (part exchange) for such work 

yes that is correct..