CGT rules on personal items: What farmers need to know

Many farmers may not know that personal items, known as chattels, sold for less than £6,000 do not attract capital gains tax (CGT).

In addition, the sale proceeds of certain items, classed as “wasting chattels”, are exempt from CGT even if they make more than £6,000.

Julie Rose, an associate at chartered accountant Simpkins Edwards, says farming families often discover items of value when clearing sheds or sorting through family possessions that may have been untouched for years.

See also: Budget highlights need for inheritance document housekeeping

Items may be inherited and have gained value since a death, or they may have gained value simply because they have been owned for a long time, or because fashions change.

“A cupboard that hasn’t seen daylight since the 1950s or a dusty tarpaulin in the back of a machinery shed could reveal something intriguing – a silver tea set in yellowing newspaper, a painting no one remembers, a shotgun your grandfather swore he’d lost, a vintage tractor that’s been quietly appreciating in value,” says Julie.

With cash tight, farming families may be looking to sell items. Julie urges caution when “clearing out”, to avoid missing something important: “You might open a drawer that looks like it’s just full of old paper, but there could be a valuable stamp collection in there.”

Here she sets out how CGT on personal items works:

• Personal physical possessions Chattels can trigger CGT if sold for more than £6,000, with the tax charged at 18% or 24%, depending on your income. Sell for £6,000 or less and there’s no CGT at all, even on multiple sales of less than £6,000.
• When items form a set For tax purposes, a set, such as silverware or dining chairs, counts as one item. If the whole set, or part of it, is sold to one buyer for less than £6,000, there’s no CGT. Selling pieces separately to different, unconnected buyers, where each sale is under £6,000, is also tax-free. 
• Jointly owned items Where an item is owned jointly (common with inherited pieces) the £6,000 limit applies per owner. 
• Sale proceeds of £6,000-£15,000 If a sale price falls between these figures, marginal chattels relief kicks in. This caps the taxable gain at no more than five-thirds of the amount by which the sale proceeds exceed £6,000. 
• Wasting chattels Usually mechanical items such as vehicles, appliances, clocks and watches. They are normally exempt from CGT, even if they sell for more than £6,000. 
• Assets used in the farm business Assets that have been claimed for capital allowances, or which, due to business use, could have been claimed, do not qualify for chattels relief or the wasting chattels exemption. Gains on sales here are subject to CGT, and output VAT may also be due. This typically affects machinery, tools and equipment rather than heirlooms.

Trading tax risk

Julie cautions that since January 2025 online selling platforms are obliged to report to HMRC the income received by sellers of goods and services.

Anyone selling more than a few personal items using this route could be judged to be trading, which would take them out of the chattels exemption net.

Inheritance tax

“It’s easy to assume that ‘bits and pieces’ don’t matter for inheritance tax, but they do,” says Simpkins Edwards’ Julie Rose.

“Valuable chattels must be included in the probate valuation.

“That’s why it’s best to know exactly what you’ve got and what it’s worth, well before probate becomes an issue, so have a proper valuation done and keep records of gifts made and items inherited, as the dates of these can be important, especially where values have increased significantly since the original event.”