Following recent sales of Chinese vases and the astonishing finds in the art world of lost Picasso’s all worth millions of pounds it is very possible that there are more pottery and art treasures to be found hidden away in your old cupboards, lofts and garages which have not seen the light of day for many years. NOW, how do you make the most of your family’s treasures and the likely problems you may encounter with valuers, auctioneers and the tax man all vying for a cut of your profits.
VALUATION – If you think something may be valuable, do as much research on the source and history of the item as possible. Who owned it before you? Where did it come from? Get on the internet or go to the library and research potters, artists and the period in which they worked. If you have difficulty in deciphering a mark or item go to the many collectors clubs that are in existence who have a great deal of information or a useful web site which has a glossary of useful items is www.antique-marks.com”
Most people can get their items valued at a local auction house or at one of the big three – Christie’s, Bonhams or Sotheby’s although many of the recent valuable discoveries have been sold but much smaller firms based around the country. Most auction houses do not charge for online estimates although you will need to email them clear colour photos of the item you wish to sell, it’s dimensions and as much history as possible. This is not a speedy process and you may have to wait four or five weeks for a response. Most auction houses including local offices of the major companies will hold valuation days where, again without charge, you can take items to be examined by experts. You will probably have to ring in advance and book an appointment.
There is a web site www.valuemystuff.com which allows you to email them a photograph of an item you wish to sell and have it valued very quickly for £5.99. Three items can be valued for £14.99 or ten for £45.99. The site has a large number of experts specialising in a variety of areas all of whom have worked for major auction houses. However it is worth bearing in mind that it is always worthwhile getting a second opinion on any items you wish to sell.
SELLING – There are three main ways to sell an item: at a local or national auction house, online at an auction site such as eBay, or to an individual or business such as a dealer or museum. The easiest way is probably through an auction house, but remember you might incur some fees even if the item does not sell, so make sure you check beforehand. For example Bonhams charges sellers 15% commission on the first £5,000 and 10% thereafter. There is also a 1.5% charge for the loss and damage warranty, regardless of whether or not the item sells. Both these charges will incur VAT at the current rate. Therefore if you sold something for £500 at Bonhams, you’d pay £96.93 in charges and VAT. If the item was valued at £500 and it did not sell, you’d pay £7.50 for loss and damage insurance and a £5 unsold charge. These are only examples and you should be aware that there is a great variety in fees charged around the country so it is extremely important you make sure of all the charges you may be liable for, prior to selling any items through an auction house.
The obvious advantage of selling on eBay is that fees are much lower and more transparent. Private sellers who auction their items are usually charged at 10% of the sale, up to a maximum of £40, however there are a number of special offers that become available. You will however need some sexperience with the use of a computer although, in this modern day and age, most people have enough knowledge or certainly can call upon the help of someone in their immediate family.
TAX IMPLICATIONS – If you sell any personal possessions for up to £6,000, there is no need to declare this to the taxman, couples can sell jointly owned items for up to £12,000. Anything above this figure, you must calculate the capital gain – this is the difference between the price you paid [or what it was valued at when you inherited it] and the price you secure when you sell. Everyone can make a £10,100 capital gain in each tax year [April 6 to April 5] before they have to pay tax – that’s £20,200 for a couple.
Basic-rate taxpayers pay 18% capital gains tax [CGT] on all gains above their allowance, while higher rate taxpayers are charged 28%. Jewellery, paintings, antiques, coins and stamps are all liable to CGT, but items expected to have a useful life of less than 50 years are exempt from it – this includes all machinery, such as antique clocks and cars.
Here’s how the limits work in practice. If a couple bought a painting in 1989 for £1,000 and sold it now for £11,000, they wouldn’t have to declare it. This is because each is entitled to £5,500 from the sale – half of the amount received – putting them below the £6,000 limit for declaring sales. If they sold it for £16,000, the total gain is £15,000, which is £7,500 each. As a result, they would have to declare this to the taxman. As each has a £10,100 capital gains tax allowance, they avoid tax.
However, if the painting sold for £30,000 there would be CGT to pay. The gain is £29,000, of which each person has £14,500 – some £4,400 more than their CGT allowance of £10,100. If they are basic-rate taxpayers they would pay 18% tax on any gain above this – so £792. Higher-rate taxpayers would pay 28% tax – £1,232.
If you sell a set of something [for example, chessmen, books by the same author, matching vases or sets of porcelain], the £6,000 limit applies to the set as a whole, even if you sell them individually to the same person. If you sell something that you have inherited, CGT will be calculated according to its value at probate. For example, the recent £53 million vase that was sold was valued at just £800 at probate which would leave its sellers with a £14million CGT bill. If something was not valued at probate then you would need to get a valuer to estimate what it was worth. You would then be taxed on the profit if you sold. HMRC says when dealing with a deceased’s estate, executors must ‘find out a realistic selling price of all of the assets’, but you ‘do not have to use a professional valuer such as a chartered surveyor.