A reader writes:
My wife and I are considering moving to a smaller home and will need to get rid of a lot of furniture and general clutter.
We also have a number of treasures that we have collected over the years and are considering putting them up for auction.
Will there be any tax liability should there be a surprise valuation?
Annie Shaw replies:
You could be liable for Capital Gains Tax (CGT), depending on the type of item, the gain between the sale price after costs and the value of the item when you bought or otherwise acquired it – such as by inheritance or as a gift – and whether you have already used any of your annual CGT allowance.
There is, however, a lot of leeway before you actually have to pay a tax bill.
Read our guide to things you have to pay tax on
Movable items that you have in or about your home, such as paintings, antiques, jewellery, vehicles and machinery, are called chattels by the taxman.
Excluded from the list of chattels that could be liable to CGT are your private car, items that have a limited lifespan – of which more later – and individual items each worth less than £6,000 (or £12,000 if you own them jointly with someone else, such as your wife). Items sold as a set, such as chessmen or a pair of matching candlesticks, are counted as a single item for valuation purposes.
How much tax you would need to pay would depend on whether the proceeds of the sale of an item come to between £6,000 and £15,000 or exceed £15,000, as different calculations are used to determine the so-called ‘chargeable gain’.
If the gain is less than £15,000, the maximum that is liable to tax is five-thirds of the amount of the gain that exceeds £6,000.
If you do unearth some real treasures, you and your wife each have an annual CGT exemption of £11,100, so there would be no tax to pay unless your gains exceeded this sum or you had exhausted your allowances elsewhere, for instance on the sale of shares.
Are those old coins worth anything? Read our guide
Finally, you don’t have to pay tax on ‘wasting assets’.
These are items such as mechanical devices believed by the taxman to have a lifespan of 50 years or less, and accordingly depreciate in usefulness and value over time.
The rule applies no matter what you sell the item for, unless it has been used for business purposes.
You may be surprised to learn that wasting assets include collectors' cars, antique clocks and guns. So if you find a Tompion clock or a brace of Purdey shotguns in your attic, you’re not only very fortunate, but you also don’t need to worry about tax.
How to spring clean and make some extra cash
Get great ideas for saving money, plus information on your consumer rights, pensions, tax and much more in our Money section.