Capital Gains For Collectibles

beatthebookienet

Does anyone know how collectibles bought for an investment are treated for capital gains tax?

I am confused if they come under the chattel exemption or the annual CGT allowance, or even if they are treated as income tax

My understanding is that the chattel exemption could be argued for limited collectible purchases such as an individual item which gives pride of possession 

But my question is what about when the scale becomes bigger, for example, someone buys 100x boxes of a sealed collectible item for £100 each and they are held for 5-10 years at which point the boxes are then worth £300 each

Does the chattel exemption apply because each transaction is below the threshold? Or because at this scale it exceeds personal activity, rather solely an investment, do the profits of the disposal accumulate towards the annual threshold over that tax year?

When it comes to dispose of the items, on the face of it it may look like trading activity to repeatedly sell sealed products. However researching the badges of trade would lead me to believe that this sort of activity would be treated as an investment rather than a trade subject to income tax because of the interval between buying and selling being many years apart

mybestattempt

beatthebookienet said:

Does anyone know how collectibles bought for an investment are treated for capital gains tax?

I am confused if they come under the chattel exemption or the annual CGT allowance, or even if they are treated as income tax

My understanding is that the chattel exemption could be argued for limited collectible purchases such as an individual item which gives pride of possession 

But my question is what about when the scale becomes bigger, for example, someone buys 100x boxes of a sealed collectible item for £100 each and they are held for 5-10 years at which point the boxes are then worth £300 each

Does the chattel exemption apply because each transaction is below the threshold? Or because at this scale it exceeds personal activity, rather solely an investment, do the profits of the disposal accumulate towards the annual threshold over that tax year?

When it comes to dispose of the items, on the face of it it may look like trading activity to repeatedly sell sealed products. However researching the badges of trade would lead me to believe that this sort of activity would be treated as an investment rather than a trade subject to income tax because of the interval between buying and selling being many years apart

You seem to have asked this, or very similar questions, a number of times over the last five or so years and have been given sound advice on each occasion.

It is for you to decide whether you have sold chattels, made capital gains or trading profits and the responsibility to make full and correct tax returns falls on you. 

If challenged by HMRC you will need to have detailed financial records and other factual evidence to support your position.