HMRC attempts to put the willies up Olympic torch sellers
You’ve got to hand it to HMRC. On top of their normal busy workload, ensuring they answer your telephone call inside an hour at least once a week, they have been beavering away writing unnecessary Briefs about skips. Now, they have even found time to write a release targeted at a fraction of a massive 8,000 people in the country.
That’s right, the latest targets in HMRC’s sights are the Olympic torchbearers. With news that a considerable number of torchbearers are seizing the entrepreneurial opportunity to sell their torch for a pretty penny, HMRC feels duty bound to remind them that, under certain circumstances, there might be a small amount of tax to pay.
Olympic torches were available for torchbearers to buy at a cost of £215, but with the current highest selling item on eBay currently standing at £6,300 , sellers could stand to make a profit. And that profit is what HMRC wants a piece of.
You see, this kind of transaction would normally fall under the capital gains tax (CGT) remit (unless you are in the business of trading memorabilia, in which case we would be looking at income tax) and you could be liable for 18% or 28% tax on the sale of your Olympic torch. It doesn’t even matter if you sell it and donate the proceeds to charity (although you could donate the torch directly), you could still be liable.
However, this is fairly unlikely. First of all, there is an exemption for ‘chattels’ where they are bought and sold for less than £6,000. So unless the sale price goes over that amount, there is no tax issue at all. Even purple_donkey currently looking at £6,300 plus might still be OK- he is actually selling the torch, the stand and the uniform, so one can only assume the stand and uniform will sell for £200 each, meaning no single chattel was worth £6,000 or more.
But even if the £6,000 limit is breached, there is then a partial exemption to help relieve tax where the item is only a little bit over the £6,000 limit. If the torch sells for £6,300, under the partial exemption rules the maximum gain chargeable will be £500. And once a chargeable gain is realised, it then has to exceed the annual exempt amount to become chargeable to tax- meaning you would have to have generated gains (not proceeds) of over £10,600 in this tax year before you pay a penny in tax. Even assuming this is the case, 18% CGT (the rate for a basic rate taxpayer) on £500 is £90.
I‘m so glad HMRC are using their resources in this cost effective way.