Selling Paintings For A Profit

Assuming that you are not trading in pictures then the only tax you may be liable to pay is capital gains tax. For items that are classed as non-wasting chattels such as jewellery, paintings and furniture, if the sale price is less than £6,000 then the gain is exempt. 

If the sale price is more than £6,000 then the gain is restricted to the sale price less £6,000, multiplied by five over three.  Based on your figures there would be no liability to capital gains tax on the first picture as the sale proceeds are less than £6,000.  On the second painting the gain will be restricted to £1,666 (£7,000 less £6,000 times five over three) not £6,700 (£7,000 less £300).

However you have an annual capital gains tax exemption, currently £10,100.  Therefore unless you have other capital gains in this tax year or the gains are more than £8,434 you will not be liable to any tax. 

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.