Selling Paintings For A Profit

In 1995 I bought two paintings, one for 200 and the other for 300.  After watching Cash in the Attic on television I took them down to the local gallery where they offered me 5,500 and 7,000 respectively.  After talking things over with my husband we have agreed to sell them.  Will I have to any tax on the profit I will make?

1st February 2010

Assuming that you are not trading in pictures then the only tax you may be liable to pay is capital gains tax. For items that are classed as non-wasting chattels such as jewellery, paintings and furniture, if the sale price is less than 6,000 then the gain is exempt. 

If the sale price is more than 6,000 then the gain is restricted to the sale price less 6,000, multiplied by five over three.  Based on your figures there would be no liability to capital gains tax on the first picture as the sale proceeds are less than 6,000.  On the second painting the gain will be restricted to 1,666 (7,000 less 6,000 times five over three) not 6,700 (7,000 less 300).

However you have an annual capital gains tax exemption, currently 10,100.  Therefore unless you have other capital gains in this tax year or the gains are more than 8,434 you will not be liable to any tax. 

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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