Capital Gains Tax in an Auction Sale

poseidon1

mybestattempt said:

poseidon1 said:

andyst said:

Thanks again everyone. Just need some advice on the matter of splitting the proceeds three ways. So say an item sells for £12,000; that's £4,000 each to the three people involved. Are we now exempt individually from CGT? Thanks in advance!

Following the guidance you first calculate the gain on the £12,000 proceeds and then divide that gain between the three people ( basic principle of taxation of jointly owned assets).

Therefore assuming this chattel was not recently inherited with a recent market value ( ie no attributable cost ) if you use  the 5/3 factor mentioned in HMRC guidance for the £12,000 proceeds (ie the 'weird' formula flagged by @DRS1 in his post) you get the following outcome: 

* £6000 x 5/3  = £10k gain

* £10k gain between 3  people is £3333

* £3333 exceeds the personal £3,000 annual CGT exemption, therefore in this case each person has a £333 taxable gain.

What you certainly  do not do  is simply divide the proceeds by three , and apply the £6,000 exemption in that way. 

As advised by Keep_pedalling, if some of these valuable chattels were actually recently inherited, ideally there should be some indication of an attempt to value them for probate purposes by the executors concerned , which could give you attributable base costs to minimise gains on sale. 

Be that as it may, as intimated in my earlier post, if you are unable to following HMRC guidance as well as  understand underlying fundamental capital gains tax principles, professional ( paid for) advice would clearly be appropriate.

At this moment and given the conflicting suggestions offered so far in this thread,  you may understandably be  inclined to give undue weight to suggestions that give you the most favourably outcome.

 If that be the case, and given your complete lack of knowledge from outset, I would then question the usefully of this thread not only to you but anyone else in a similar situation.

Sorry, but I disgree as your reference to a "basic principle" for jointly owned property is not correct.

CGT is chargeable on an individual. Where an asset is jointly owned the capital gain arises on the individual's share of the asset; that is their share of the consideration less their share of the acquisition value/costs and other allowable costs. 

In practice the disposal of a asset by joint owners may give rise to the same capital gain for each, but that is simply because their respective shares of the consideration and value/costs are the same.

Similarly, so far as chattels are concerned the £6000 consideration exemption applies to each of the joint owners, this link from the official HMRC guidance explains:

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76573

Here i confess  to mea culpa in not realising chattles obtain very favourable treatment where jointly owned. 

Clearly from the guidance  you supply jointly owned chattels have been accorded a different  (and more advantageous)  treatment  in terms of gains calculations compared to say joint owners of land and property. A lesson here for me I gladly take on board,

Jeremy535897

If the chattels are genuinely owned by three people in equal shares, and no chattel sells for more than £18,000, there will be no gains, unless the rules on sets apply.