The Revenue will love people who sell their Olympic torches on eBay.
As you may have seen in the news, people are selling their Olympic torches on eBay for vast sums of money. The reason why HMRC will be licking their lips with joy is because Capital Gains Tax may have to be paid, even if the seller gives all the proceeds to charity.
The Olympic torch bearers have been able to buy their torches in the region of £200 – this is nothing compared to the price that they are being sold for.
Some of the torches have sold for over £100,000. Capital Gain Tax on a sale price of £100,000 would be in the region of £21,500 to £25,000! This will also mean completing a self assessment tax return because Capital Gains Tax is due.
HMRC are at present paying very close attention to people who sell on websites such as eBay (see http://www.cgb-
Who said tax didn’t have to be taxing! (The calculations and finer details have not been included here).
Capital Gains Tax
Capital Gains Tax is due on the difference between the selling price and the cost of the item (including any expenses incurred in selling the item).
For Capital Gains Tax purposes, the torch is classed as a ‘chattel’ (a personal possession).
The Capital Gain Tax that arises on the sale of the torch depends on the price it is sold for.
If the torch was sold for less than £12,360, no Capital Gains Tax would need to be paid.
Over £12,360 and Capital Gains Tax will need to be paid. Depending on the individual’s taxable income, Capital Gains Tax may be paid at 18% (basic rate taxpayer) or 28% (higher rate taxpayer) above the annual tax free amount of £10,600.
Putting this into perspective for the prices some of the torches have sold for, if a torch sold in the region of £100,000, Capital Gains Tax would need to be paid in the region of £21,500 to £25,000!
Care also has to be taken if the seller then gives the money to charity through Gift Aid. To be able to give Gift Aid, the donor must have paid at least as much tax as the relief claimed by the charity. If the donor has not paid as much tax as the amount the charity claims back from the donation, the donor will have to pay HMRC the excess tax.
Gift Aiding the money received to charity will reduce the Capital Gains Tax due on the sale.
As you can see, selling an Olympic torch is a pretty complicated area when it comes to determining how much tax will be paid on the sale and careful planning needs to be carried out to ensure additional tax is not due to be paid if the proceeds are Gift Aided to charity.
If you are lucky enough to be an Olympic torch bearer and are looking to then sell the torch afterwards, or if you know of anyone who is thinking of selling their torch, be aware that a large amount of tax may be due on the sale of the torch, even if the proceeds are given to charity.
If you would like advice if you have sold or are thinking about selling an Olympic torch, or you have a question about Capital Gains Tax, get in touch and we will be happy to help.
C & GB Associates -
Tel & Fax: 01845 525502