When you dispose of valuable possessions – like antiques or jewellery – you might find yourself unexpectedly liable for Capital Gains Tax (CGT). At Horsfield & Smith, we help individuals and businesses in Bury and beyond navigate the finer details of UK tax law, including CGT on personal assets known as chattels.
Understanding how chattels and Capital Gains Tax interact can help you reduce exposure and remain compliant with HMRC regulations.
What is a chattel?
A chattel is an item of tangible movable property – meaning physical items that can be transported and are not fixed to a building or land. These include:
- Household furniture
- Paintings, antiques, items of crockery and china, plate and silverware
- Collectables such as coins or vintage items
- Lorries and motorcycles
- Plant and machinery not permanently fixed to a building
What isn’t a chattel?
Chattels do not include:
- Money or financial assets
- Property held solely for investment
- Assets used mainly for business purposes where capital allowances have been or could have been, claimed
- Items that are permanently fixed to a building
Understanding this distinction is key when assessing whether a disposal may be subject to Capital Gains Tax.
Are chattels exempt from capital gains tax?
Not always. But several types of chattels are exempt from Capital Gains Tax, including:
- Wasting assets – Items with a predictable life of 50 years or less (unless used in a business)
- Private motor vehicles
- UK sterling coins used as currency
- Foreign currency held in bank accounts
However, if your chattel doesn’t fall under these categories, CGT rules may apply depending on the proceeds of the sale.
When do you pay CGT on chattels?
If a single chattel is sold and the proceeds exceeded £6,000, then Capital Gains Tax could apply. The calculation depends on how much you receive from the sale:
If proceeds are:
- £6,000 or less – No CGT due
- Over £6,000 but less than or equal to £15,000 – Use the marginal relief calculation
- Over £15,000 – Use standard CGT calculation rules
How to calculate the maximum chargeable gain
Here’s an example to illustrate:
Example:
You sell an antique table for £9,250.
- It originally cost you £2,000
- You incur incidental selling costs of £350
- Total cost: £2,350
- Actual gain: £9,250 – £2,350 = £6,900
Now apply the marginal relief calculation:
- Proceeds exceeded £6,000 by £3,250 (£9,250 – £6,000)
- Multiply this by 5/3 = £5,417
- This is the maximum chargeable gain
Since £5,417 is less than your actual gain (£6,900), £5,417 is the taxable gain. This method helps reduce the gain to a fairer value for tax purposes.
Gifting chattels
A gift of a chattel is still considered a disposal for CGT purposes. The disposal is calculated using the open market value of the item on the date it was given away – not the price paid (as it’s a gift).
It’s strongly recommended that you obtain a formal valuation. This is particularly important for family gifts, where HMRC may scrutinise values more closely.
Sets of chattels
Some items may be part of a set of chattels – defined as multiple items that are:
- Similar and complementary in nature and
- Worth more together than separately
For example, paintings by the same artist, cutlery sets, or books by the same author may be considered a set.
If such items are sold to the same person or to connected persons, then the £6,000 limit applies to the set collectively, not to each item individually.
Annual exemption can still apply
Even if your proceeds exceed £6,000, you may still not owe CGT thanks to the annual exemption.
For the 2024/25 and 2025/26 tax years, the Capital Gains Tax annual exemption is £6,000. If your total taxable gains for the year (including chattels) fall below this threshold, you won’t pay CGT.
We can help you track and time your disposals strategically to remain under the exemption threshold.
Income Tax considerations
Generally, the sale of a chattel is not subject to Income Tax. However, if there is a pattern of buying and selling – suggesting a trade rather than an investment – HMRC may consider it to be a trading activity, making gains subject to Income Tax.
Our advisory team can assess your situation and guide you on the correct tax treatment.
VAT and chattels
In most cases, CGT applies without VAT involvement. However, if you’re dealing in collectable coins, be aware:
- Coins sold as investment gold are exempt from VAT
- Coins sold for collectable purposes may be subject to VAT at the standard rate
- These coins also do not qualify for inclusion in the VAT second-hand scheme
If you’re unsure about VAT on such items, speak to one of our VAT specialists.
Why partner with Horsfield & Smith?
At Horsfield & Smith, we’ve supported individuals and business owners across Bury, Greater Manchester and the North West for over 100 years. Our dedicated tax advisory team can guide you through the chattels and Capital Gains Tax rules, including exemptions, timing strategies and accurate record-keeping.
Whether you’re selling a single antique, a full set or gifting items to loved ones, we’re here to ensure your tax affairs are fully optimised and compliant.
Get in touch today.
Need tailored advice on Capital Gains Tax and the sale or gifting of personal possessions?
Contact our accountancy team on 0161 761 5231 or email us at theteam@horsfield-smith.co.uk.
For complex disposals or when calculating potential reliefs, it’s advisable to seek professional tax planning advice to ensure you meet your CGT obligations efficiently and legally. Let us help you manage your tax position with confidence and clarity.
