Chattels are tangible, moveable property. We examine what makes chattels collectibles in England, and find that consumer demand, scarcity, and history all have a role to play.
These tangible assets are possessions their owners could touch, and move around if they wished to. This distinguishes chattels from investments which are virtual assets, and fixed property which is just that.
How Chattels Become Collectibles
Personal, touchable, moveable assets attract collectors, when something makes them stand out in their minds. There are several reasons why this attraction could materialise:
Economic and Market Factors
A chattel could attract a collector’s interest if it is unusual, scarce, in original condition, exceptionally preserved, or has an interesting history. Those factors may combine to make it a good investment. But there are other reasons too.
Cultural and Social Factors
A chattel can also become worth collecting, if it has social value or has historical interest. For example, chattels can become collectibles if they are a famous brand, or played a role in the evolution of our society.
Collectibles Have Tax Advantages
Chattels with a predicted lifespan of less than 50 years, may be exempt from capital gains tax in England. Sets of similar items may be taxed as a group, or individually. These factors influence what people choose to collect.
There are a number of interesting cases of chattel ownership, where fine wines, classic cars, and art works proved to be more than ‘just personal property’. We single out two examples of what makes chattels collectibles, that we find particularly interesting:
- HMRC v Executors of Lord Howard 2014 – The Court ruled a painting sold for several million pounds was capital gains tax-exempt. This was because the painting created several centuries earlier, was a wasting chattel more than fifty years old.
- Fisher v HMRC 2014: Fisher argued successfully that the sale of his classic car was capital gains tax-exempt, because it was a mechanical device. English law exempts such devices because ‘they deteriorate over time’.
HMRC Capital Gains Manual CG76902 confirms that bottles of wine and spirits are considered wasting assets with expected life less than 50 years. Even though they may last longer, and rise in value quite dramatically.
More Reasons Chattels Are Collectibles
Jewellery and precious metal chattels can prove to be excellent investments if valued correctly, and chosen wisely. However, these do attract capital gains tax when sold, although HMRC exempts the first £6,000. This means:
- If we sell a collection of jewellery for say £100,000 the first £6,000 would be tax free.
- However, if we sold the items separately, then each one should qualify for the £6,000 rebate.
- This principle applies to every class of chattel from race horses to diamond hat pins.
Antique clocks, furniture, and musical instruments are all examples of wasting chattels with a theoretical lifespan of less than fifty years. HMRC exempts them because they are either mechanical devices, or contain natural organic materials.
Coins and stamps are another example of what makes chattels collectibles. In this instance, their value depends on their mint rarity, historical issue, and completeness of sets. Once again, we may possibly pay less net capital gains tax, if we sell less valuable coins and stamps in smaller sets.
Modern Collectibles Also Benefit
We don’t have to be fine art or antique experts with deep pockets, to make money with collectible chattels. Modern collectibles like memorabilia, trading cards, and toys are becoming increasingly popular on internet marketplaces.
These items are all movable, tangible personal property, and some are increasingly popular. The same principles governing what makes chattels collectibles, apply to them too.
Many of these items are by definition non-wasting, because they are non-perishable. Capital gains can be taxable above the £6,000 threshold, although HMRC seldom follows up on small private sales. Here’s a summary of what we have shared:
Criteria For Collectible Chattels (Use With Acknowledgement)
Independent Opinions Matter
We can’t sell our chattels and make a profit, unless we purchase them at a fair price, and put a market-related value on them. The value of English collectibles is heavily influenced by what happens on the market floors of major auctioneers.
These sales are generally public, unless discretion and privacy dictate otherwise. The auctioneer acts as agent for the seller, although both parties are bound by the result.
These factors result in leading auctioneers functioning as virtual authorities for determining collectability. Their catalogs, sale results, and professional expertise establish norms that are almost precedents.
So now you know all about what makes chattels collectibles. Perhaps you want to purchase or sell a collectible item, but you are unsure about what constitutes a fair price. Avery Associates are deeply experienced professionals with extensive experience working in leading London auction houses.
Why not give Avery Associates a call and see what else you can learn about the fascinating world of collectible chattels and their value?
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