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The Tax Free Antiques Road show CGT and Chattels

The Tax Free Antiques Road show CGT and Chattels

I gave my wife a chattel for her birthday last month – and I expect you gave your spouse one too.


A “chattel” is defined for tax purposes as “tangible moveable property”:


  • “Tangible” means it is a physical object, such as the watercolour painting I gave my wife and not an “intangible” asset such as a share in a company. Some assets are a mixture of a chattel and an intangible asset – a “cherished number plate” for a car is partly a chattel (the actual piece of metal or plastic with “JB 1” or whatever on it), but the majority of its value lies in the (intangible) right to use it as your car’s number plate.
  • “Moveable” means you can move it. It does not need to be easy to move, like a painting – our sofa is a chattel, but I nearly killed myself manhandling it into the house. Basically, if you can move it without demolishing it, it is probably a chattel. A building which is fixed to the ground is not a chattel but a tent is.


Common examples of chattels are:


  • paintings,
  • sculptures,
  • antiques,
  • furniture,
  • jewellery,
  • books,
  • models and toys,
  • clocks,
  • and so on.


If you want to see a lot of chattels in one place, watch the Antiques Roadshow on BBC TV!


If you trade in chattels, buying and selling them to make a profit, then you are liable to income tax on your profits, and this article is not for you. If, on the other hand, you occasionally sell one of your private chattels, you may be pleasantly surprised at the way it is treated for CGT purposes.


“Wasting Assets”


The rules are different for chattels which are “wasting assets” and for those which are not.


A “wasting asset” is one which has a predictable life of 50 years or less, and to be honest, I can’t think of a chattel which you might sell at a profit which would have such a short life. Certainly the ones I have listed above all have longer lives than that.


For CGT purposes, however, “Plant and Machinery” is deemed always to have a predictable life of less than 50 years. Looking back at our list, the clocks, and some of the models and toys, would be considered “machinery”.


Provided the chattel concerned has not been used of the purposes of a “trade, profession, or vocation” by the person selling it, and it is a “wasting asset”, it is exempt from CGT.


You could sell that antique clock for thousands of pounds, and you would not have to pay any CGT.


Not surprisingly, HMRC are likely to look very closely at claims that chattels sold for large sums are “machinery”. Top quality shotguns can be very valuable, and at one time HMRC tried to argue that a shotgun was not “machinery” (because it only goes “bang” once when you pull the trigger, whereas a machine gun is “machinery” because it goes bangbangbangbangbang when you pull the trigger!). They came to their senses in February 2000 and agreed that “while the matter is not free from doubt”, all guns are machinery.


Motor Vehicles


Ordinary passenger cars are completely exempt from CGT, and other motor vehicles (racing cars, single seaters, motorcycles and so on) are “machinery”, so as long as you have not used them for the purposes of a trade, profession or vocation, they will also be exempt from CGT.


Other Chattels


Chattels which are not “wasting assets” are not exempt from CGT, but there is still some relief on them:


Sale proceeds less than £6,000


If you sell a chattel for less than £6,000, the gain is exempt from CGT. If there is more than one owner, each owner is entitled to their £6,000, so if a couple sell a painting for £12,000, the gain would be exempt.


Sale proceeds over £6,000


If you sell a chattel for more than £6,000, you are entitled to some relief.


The maximum capital gain that can be charged on you is five thirds of the difference between the sale proceeds and £6,000:


Albert sells a painting for £10,000. It cost him £500.


The maximum gain he can be taxed on is:



Sale proceeds


Less 6,000




5/3 of difference




If we calculated the gain in the normal way, it would be £9,500 (£10,000 - £500), so Albert is only taxed on £6,667.


If he had paid £4,000 for the painting, his gain would have been £6,000, and as this is less than the £6,667, he would be taxed on the actual gain of £6,000.


Sets of Chattels


In order to prevent people exploiting the £6,000 limit by selling items singly when they are really part of a set, there are special rules for “sets” of chattels.


A “set” is a group of chattels which are essentially similar, and which taken together are more valuable than the sum of their parts:


Roger has a collection of model soldiers, representing Wellington and his Staff Officers at Waterloo. There are 6 model soldiers in the set. If he only had one soldier, it would be worth £1,000, but as he has the complete set, it is worth £12,000.


Oliver wants to buy the set, and so in January Roger sells him three of the soldiers for £6,000, and in March he sells him the other three, also for £6,000.


Because the soldiers were clearly a set, Roger will be treated as if he had sold all the soldiers at one time for £12,000.


The same would apply, incidentally, if Roger sold three soldiers to Oliver, and three to Oliver’s sister Olivia – HMRC would be able to show that Oliver and Olivia were “acting in concert” to acquire the set.


Rather as with the definition of “machinery”, there can be arguments with HMRC as to whether a group of chattels are a “set” or not.


That’s enough about chattels – it’s time to take my Spaniel (a wasting asset, if ever I saw one!) for a walk.