Paying tax when selling collectibles

[Hairybaker]

My OH has always loved trainers and has around 100 pairs, mostly unworn. Their value has gone up, say from £150 to £500 each on average. If he were to sell them what is the tax implication?! Not getting much useful info from the HMRC website.

If he has had the collectibles more than a year they are taxed as capital gains. You get a generous allowance of about £10k this year but it halved next financial year (April onwards) and again the April after. So if he plans to sell it may be worth selling a load in the next 3 months. The gain would be 500-150 not the full 500, you could probably take ebay/platform costs off too.

Depends if he's doing it as a business or selling his personal stuff

Depends if he's doing it as a business or selling his personal stuff
If he sets up a business, it will have to buy the stuff off him to sell, so he'll still be making a personal capital gain.

Thanks all. He is employed full time and is a higher rate tax earner if that makes any difference?

I will look into the capital gains tax rules and changes as you’re right it sounds like it’s worth selling some asap!

CGT allowance is £12300 not £10000 as per PP.

If he's an additional rate tax payer any gains over £12300 are taxed at 20%. He will need to do a self assessment tax return.

If your OH is actually your husband or civil partner then they could gift some to you (at no gain no loss - ie cost) for you to sell and use your annual allowance as well (if they are going to exceed theirs).

Doesn't apply if you are just partners.

Thank you! I found the £12300 allowance on hmrc website so that makes sense. Is there a maximum amount of profit he can make so you know, or not as long as he pays the 20% on everything over the alliance?

*allowance that should say!

There is no maximum amount but as above you have to pay tax on anything over the annual exempt amount of £12300 although I would check if trainers are classed by HMRC as wasting chattels I.e have a useful life of less then 50 years in which case they are exempt anyway.

If he is doing it as a trade then it would be classed as trading income. If it’s a hobby then they are exempt from CGT as they are “wasting chattel” ie short useful life, movable and less than £6k each. No CGT due and no tax return required.

I just came back to say "chattels".
www.gov.uk/government/publications/chattels-and-capital-gains-tax-hs293-self-assessment-helpsheet/hs293-chattels-and-capital-gains-tax-2019#introduction

Thanks all, really appreciate this, although it’s so confusing! I did think they may be classed as a chattel but will have to check.

They will be well under £6k each but there is a lot of them so profit could be in the thousands. How do you know when a hobby starts and a business ends? He bought them as he loves designer/sports stuff but a lot of them have gone up in value and we need the spare room back in the house! 🤣

How do you know when a hobby starts and a business ends? He bought them as he loves designer/sports stuff but a lot of them have gone up in value and we need the spare room back in the house! 🤣

This circumstance wouldn't usually be classed as a trade as they weren't bought with the intention of selling and they have been in his possession for a long period of time. If he was buying them and listing them for sale within a short time period they would then appear to be stock and the sale would be a trade.

There are markers on HMRC but things like operating with a view to a profit, frequency of purchases and sales etc would indicate a trade.