Memorabilia Moving house and selling F1 momentos and collectibles - question about tax on them?

LucasDyer · 3 May 2018, 17:45 (Ref:3819199)

Hi!

I'm going to be doing a big move across the country and will be downsizing significantly because of the area we are moving to. I will be auctioning a chunk of my Formula 1 collection, but was wondering if it will count as taxable income? Some of the items have appreciated which is what I'm mainly concerned about. What does the money I actually make from them count as? I've looked at this tax tool but there isn't an option for gain on sales, so was hoping someone could help me out here. Thanks!

morninggents · 4 May 2018, 09:14 (Ref:3819340)

Hi

It would be helpful to have a rough idea of what sales value you expect for each item and what the cost was.
As far as I can see the tax will be levied on items you sell with a value of £6,000 or more, but not sure if this is individual items or a collective value - I think it may be on individual items but that should be checked. The £6,000 figure does not apply to 'your car' but, again, 'your car' is not defined.
In any tax year there is a tax free allowance on total capital gains - currently £11,700, so if you make the gains in two tax years (a tax year is from 6th April to the following 5th April) then you then have £23,400 to play with.
Also, you can gift assets to your spouse free of gains tax so that he/she could sell them and get the same yearly allowance. Not sure if the 'gift' has to remain with the recipient for any length of time before it could be sold but suspect not.

Go on to the HMRC official site and look there, it's very helpful.

Mike Harte · 4 May 2018, 09:50 (Ref:3819353)

This seems to be the page on the official site that is appropriate for you. It would appear that it is likely that the Autosports would be considered a set, so it might be prudent to break up the sets into smaller groups if you believe that they may be worth more than £6,000 or breach your annual allowance of £11,700. See: https://www.gov.uk/capital-gains-tax...ssessions/sets

And don't sell them all to the same person as that may be considered as an attempt to evade paying any potential Capital Gains Tax.

MGDavid · 4 May 2018, 10:24 (Ref:3819357)

My understanding is that tax is only due on profits from 'trading'. If you buy stuff with the intention of selling it on, it's trading. If you buy stuff as part of your hobby or pastime, then (maybe years) later sell it (due to downsizing for instance) then any 'profit' is not taxable. In any event who keeps records of what they paid for 'hobby' items? in case their partner found out!).
You used to be able to churn up to 6 vehicles per year without attracting HMRC's interest, not sure if that still applies.

JohnMiller · 4 May 2018, 10:51 (Ref:3819368)

Quote:

Originally Posted by MGDavid

If you buy stuff as part of your hobby or pastime, then (maybe years) later sell it (due to downsizing for instance) then any 'profit' is not taxable.

You might want to look up CGT more than BGT!

Mike Harte · 4 May 2018, 11:18 (Ref:3819375)

Quote:

Originally Posted by MGDavid

My understanding is that tax is only due on profits from 'trading'. If you buy stuff with the intention of selling it on, it's trading. If you buy stuff as part of your hobby or pastime, then (maybe years) later sell it (due to downsizing for instance) then any 'profit' is not taxable. In any event who keeps records of what they paid for 'hobby' items? in case their partner found out!).
You used to be able to churn up to 6 vehicles per year without attracting HMRC's interest, not sure if that still applies.

It's not "profit" that determines these things; it is capital gain. Even if you purchased a painting and had it hanging on your wall for a number of years, you would still be liable for any potential tax on the gain on the sale. It's a long time since I studied tax, but you used to be able to offset some of that gain on a sliding scale determined by how long you had held the asset, but I cannot remember whether that allowance still remains.

NaBUru38 · 4 May 2018, 13:24 (Ref:3819400)

Quote:

Originally Posted by MGDavid

My understanding is that tax is only due on profits from 'trading'. If you buy stuff with the intention of selling it on, it's trading. If you buy stuff as part of your hobby or pastime, then (maybe years) later sell it (due to downsizing for instance) then any 'profit' is not taxable.

https://en.wikipedia.org/wiki/First-sale_doctrine

Mike Harte · 4 May 2018, 13:55 (Ref:3819425)

Quote:

Originally Posted by NaBUru38

https://en.wikipedia.org/wiki/First-sale_doctrine

Two points.

Firstly, we are discussing tax law in the UK, assuming that the OP lives in the UK. Your link relates to the USA.

Secondly, the doctrine controls the sale of copyrighted material in the States, not the taxation on the sales of such material.

MGDavid · 4 May 2018, 17:40 (Ref:3819490)

Quote:

Originally Posted by JohnMiller

You might want to look up CGT more than BGT!

I'm aware of CGT and as already alluded to by morninggents it only applies to each individual item worth in excess of £6000. I'm not sure what sort of F1 mementos and collectibles might fall into that category, or indeed how many - if any - of them Lucas might have? I suppose if he has a shedfull of old F1 cars....

morninggents · 4 May 2018, 21:33 (Ref:3819539)

Quote:

Originally Posted by morninggents

Hi

It would be helpful to have a rough idea of what sales value you expect for each item and what the cost was.
As far as I can see the tax will be levied on items you sell with a value of £6,000 or more, but not sure if this is individual items or a collective value - I think it may be on individual items but that should be checked. The £6,000 figure does not apply to 'your car' but, again, 'your car' is not defined.
In any tax year there is a tax free allowance on total capital gains - currently £11,700, so if you make the gains in two tax years (a tax year is from 6th April to the following 5th April) then you then have £23,400 to play with.
Also, you can gift assets to your spouse free of gains tax so that he/she could sell them and get the same yearly allowance. Not sure if the 'gift' has to remain with the recipient for any length of time before it could be sold but suspect not.

Go on to the HMRC official site and look there, it's very helpful.

I should have pointed out that the sale of your items would fall in the area of Capital Gains Tax (CGT), and not Income Tax, subject to the provisos I mentioned in my earlier post. However, I think I am right in saying that any capital gains, less capital losses, in excess of your annual allowance would then be added to your other income which may put you in to a higher tax bracket if you are not there already.

MGDavid · 4 May 2018, 22:23 (Ref:3819547)

Quote:

Originally Posted by morninggents

I should have pointed out that the sale of your items would fall in the area of Capital Gains Tax (CGT), and not Income Tax, subject to the provisos I mentioned in my earlier post. However, I think I am right in saying that any capital gains, less capital losses, in excess of your annual allowance would then be added to your other income which may put you in to a higher tax bracket if you are not there already.

Not exactly; CGT and PAYE (income tax) are separate and they are not added together. However CGT is payable at two different rates, depending on your highest PAYE rate.
If you pay PAYE at 20% (i.e. earn less than £46350 this year) then you would pay CGT at 10%. If you earn over £46350 and are in the PAYE 40% band then any CGT will be payable at 20%.

morninggents · 5 May 2018, 00:10 (Ref:3819559)

You are correct, David. I should have checked.

GregUK · 5 May 2018, 02:20 (Ref:3819562)

I understand that if items were not procured with the intention of reselling them at a profit, then no tax liability is accrued.

Further, I can't imagine that the bods at HMRC would be too interested in the sale of a Tyrrell front-wing end-plate that you dug out of the Paddock Hill armco 30 years ago ......

Truckosaurus · 8 May 2018, 10:38 (Ref:3820768)

I'm sure the taxman (in whatever jurisdiction the OP is from) would be interested in any profits made, not matter if that was the intention or not when they were purchased.

Usually you will have a tax free allowance each year (around £11k in the UK from memory) so plenty of profit to be made before taxes are owed, plus you might be able to offset losses on other items against the profitable items.