Make a Killing at NO RESERVE Government Auctions Part10

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Everything You Could Ever Need to Make a Killing at Auctions


Written by Research Team Government Auctions UK  (type it in Google to find us)

NO RESERVE AUCTIONS

Get an Amazing 25%, 50% or Even a Massive 97% Off Property, Cars, Vans, Computers, Plasma TVs, LCDs, Videos, Cameras, Antiques, Mobile Phones, Household Goods... In Fact, Just About Anything!

Make a Killing at NO RESERVE Government Auctions Part 10

TAXING TIMES

(Tax laws change regularly always consult your accountant - THIS SECTION IS PUBLISHED FOR GUIDANCE ONLY AND NOTHING HERE CAN BE CONSIDERED AS TAX ADVICE OR BE RELIED UPON IN ANY FORM WHATSOEVER)

If you are buying and selling items that you have purchased at auction on an occasional basis, then you will probably fall outside the tax trap as you fall under the tax rules relating to chattels. Chattels are tangible movable property and include for example, coins, furniture, jewellery, works of art and motor vehicles (except those used in a business).

If you invest in valuable objects, for example at auction, and later sell them on there is no liability to income tax. Then again, there is also no relief for the costs of ownership such as insurance and maintenance. You may also legitimately be able to avoid capital gains tax as the capital gains tax of a chattel depends on the nature of the chattel, and sometimes on its value.

Motor vehicles and other chattels that have a predictable life of 50 years or less are known as wasting assets. They are totally exempt from capital gains tax unless they have been used in a business and capital allowances have been, or indeed could have been, claimed on them. Plant and machinery are always regarded as having a predictable life of 50 years or less. For this reason privately-owned items - ranging from greyhounds to yachts and even antique clocks (classed as machinery) are exempt from capital gains tax on disposal because they wasting assets.

A gift of a chattel is treated as a disposal at open market value at the date of the gift. It is therefore essential that some evidence of the transaction is available - such as correspondence, for example, that will help arrive at an estimated value.

If the value of the gift is under £6,000 then no tax charge will arise. If the value of the gift exceeds the £ 6,000 level it may even be possible to use the annual £6,300 IHT annual exemption. If this is not possible it may still be possible to class the gift as a potentially exempt transfer and if the donor survives the gift by seven years then no IHT charge will arise.

The big problem with selling chattels and valuables arises if you try to do it too often. In that case it is treated as trading - particularly if it can be shown that your motive that is profit rather than for example, collecting, or there is no 'pride in ownership'.

If you are in the business of buying and selling at auction then you are a trader and liable for income tax and, of course, the dreaded Value Added Tax. However, this whole area of tax, and the ways of legitimately avoiding a tax liability is well beyond the scope of this guide. Here the best advice we can offer is get professional advice from an accountant.

Kind regards
Government Auctions UK Team
 
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