Firstly, I would like to state that I am now a retired student but still enjoy reading the interesting discussions which populate the boards.
The question.
If someone has collected records (vinyl discs) over a number of decades and decides to sell them individually does this become trade?
As a supplement to the question, would it be acceptable for someone who started a similar collection now to produce cash accounts and offset losses against employment income?
Finally, how would you establish a profit, take the individual purchase price of a record bought 40 years ago for 50p and sold for £10 today?
My thoughts are that HMRC would like to receive income form the sale of the records but would reject the claim for the losses as a personal expense. This seems a little unfair if the revenue dismiss something as a personal collection only to demand tax from the proceeds of its disposal.
Replies (6)
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I would say that as posted
the answers are
No and No, because they were most likely purchased for the enjoyment of the content and not with an eye to selling at a profit in the future.
I don't think I have ever bought a record because I thought that one day it would be worth something - probably says something about my taste in music even though I do happen to have a couple of albums that are worth quite a bit now, but by pure chance and rarity.
They are just chattels and at best a CGT matter, though worth nowhere near the exemption so that's OK.
Clearly different for the person who actively goes out searching out the rarities to immediately sell on, but that wasn't the question.
No
In my view, Paul's advice is correct although the number of discs involved does make CGT an issue, I would have thought, as I suspect the value may average at least a few £ giving a sizeable sum if a complete disposal is made.
A couple of further points
First, as alluded to by Mr Yaboots the chattels exemption £6,000 limit would need to be considered in the context of any complete set that is sold to the same person. This doesn't necessarily mean the whole collection, either; if a whole part of the collection (eg everything by the Beatles) were sold, this could constitute a set.
Second, in a similar query recently in Taxation magazine, coincidentally posed by a Wolfman, there was also the issue that the individual had started to actually trade in records by buying them with the intention of reselling them.
In that situation, when a decision is made to sell records from the former collection, this could be regarded as an appropriation to trading stock, with the effect that any profit accruing after appropriation would become liable to income tax.
Records
I sold a few vinyl records a couple of years ago. Never entered my head that it was trading.