Families keen to raise funds by selling assets at auction are being encouraged to consider the tax implications of profitable antique sales. As the value of heritage artefacts continues to rise, the taxman will become increasingly rigorous in identifying those who exceed their Capital Gains Tax (CGT) allowance threshold, requesting up to 28 percent of the sale. Families should familiarise themselves with the intricacies of CGT and take steps to mitigate its effects, says Oxfordshire-based accountancy firm Whitley Stimpson.
“The popularity of TV programmes such as Antiques Roadshow coupled with financial concerns brought about by the economic crisis have prompted many families to sell heirlooms they might otherwise have kept,” explains Owen Kyffin, Tax partner, Whitley Stimpson. “Auction houses are seeing unprecedented levels of activity as more people step forward to seek their fortune, while interest from wealthy foreign buyers has sent values soaring. However, many vendors are being stung with large tax bills through a lack of knowledge of the tax implications surrounding lucrative sales.”
With increasing numbers of millionaires emerging in countries such as China, the value of Chinese artefacts has experienced a dramatic increase in recent times, with items such as porcelain vases, fine art and jade fetching exorbitant prices. British families looking to capitalise on this growing trend should be aware that Capital Gains Tax is applied to any sale that exceeds £10,600 within a tax year.
“Being aware of your annual tax exemption is an important first step in managing antique sales efficiently”, continues Owen. “The savvy vendor will then need to review how best to mitigate Capital Gains Tax in order to keep the amount of tax due to a minimum.”
Among the measures that would-be antiques vendors should consider, Owen recommends researching inter-spouse transfers, dividing the sale across two tax years (if the nature of the asset makes this a viable prospect) and offsetting the gain by generating a capital loss from other assets. It is also important to understand whether the asset being put forward for auction is a wasting asset. This type of asset has a predictable life of 50 years or less, and is therefore exempt from CGT.
Whitley Stimpson has provided sound tax advice to individuals and businesses for more than 80 years. Its tax specialists together with recommended professional valuers can help families to maximise the profit made through antique sales by facilitating a greater understanding of the machinations of Capital Gains Tax and advising how best to avoid incurring expensive tax bills.
For further information or to book an appointment with one of Whitley Stimpson’s tax specialists, please visit www.whitleystimpson.co.uk or call 01295 270200.