It wouldn’t be right if we didn’t cover a tax issue with an Olympic flavour just as the games are about to start in London. HMRC has given us a perfect opportunity after they issued guidance to those lucky taxpayers who happen to be in possession of an Olympic torch and may decide to sell it – by reminding us that they will make a capital gain from any such sale.
The guidelines relating to CGT and Olympic torches were issued after a couple of torches were offered for sale on eBay where they fetched thousands of pounds. A quick search when writing this article verifies this as more than a mere urban myth and has thrown up an official torch available for a ‘buy it now’ price of £4,000, giving an indication of the strong demand for Olympics memorabilia.
According to HMRC if you sell a torch for more than £6,000 it might be subject to capital gains tax. This is dependent on any other gains you might accrue during the tax year, and this gain will be charged at a tax rate of either 18% or 28% depending on total income levels.
There is of course the opportunity to then donate all or some of the proceeds to charity as a gift aid donation and claim higher rate tax relief on the donation. Alternatively, if you are in possession of a torch and genuinely want to use it to make a charitable donation, you could just give your chosen charity the torch itself. You are then able to claim an exemption from capital gains tax, together with income tax relief, and your chosen charity can either keep the torch or sell it to secure their funds directly.
If you have an Olympic torch and want to sell it, please feel free to contact me directly. I won't buy it off you but can help advise on the tax implications!