Her Majesty’s Revenue and Customs (HMRC) have just issued timely guidelines about selling Olympic torches and liability for Capital Gains Tax (CGT). If you have been in the Torch Relay and have an Olympic Torch you wish to sell, you should be aware of the tax implications.
Bearing in mind that not many of us have participated as a torch bearer in the Torch Relay, this HMRC advice of course applies more widely to all sales of assets which are articles of movable property – chattels.
If the torch is worth less than £6,000 when you sell it then you will not have to pay Capital Gains Tax (CGT) on your proceeds. If it is worth more than £6,000, you will have a chargeable gain and you may have to pay CGT, depending on whether you have other gains in the tax year. If you have to pay CGT, the rate charged will be either 18 per cent or 28 per cent, depending on your total income for the year.
You should bear in mind the possibility that selling your torch might be, or might be part of, a trade, in which case any profit would be charged to Income Tax rather than CGT. People who occasionally sell a few personal possessions to raise some cash are not trading, but the things they sell may still give rise to taxable gains as explained above. However if someone regularly sells goods or services, they are likely to be trading and will be liable to Income Tax on their trading profits.
Even if a torch is sold and the proceeds are given to charity, depending on the amount received, you may incur a CGT charge. There is no exemption from CGT even if you donate the money you receive on selling the torch to charity.
If you decide to donate the sale proceeds (or the net sale proceeds after CGT) to a charity, you will be able to make the donation of money under Gift Aid. For every £100 you donate, the charity will reclaim £25 from HM Revenue & Customs (HMRC). In order for the donation to be valid under Gift Aid you will need to pay enough Income Tax or CGT in the tax year to cover the amount of tax the charity will reclaim on your gift.
Of course, if you give the torch to a charity for them to keep or sell themselves, rather than sell it yourself, there will be no charge to CGT.
If you require any assitance with regards to tax planning, please do not hesitate to contact a member of the team.
