The £6,000 rule for selling personal items

What the rule actually is

This isn't about trading or a side hustle at all — it's Capital Gains Tax on personal possessions, sometimes called "chattels". GOV.UK puts it plainly: you may have to pay Capital Gains Tax if you make a gain when you dispose of a personal possession for £6,000 or more. The examples it gives are jewellery, paintings, antiques, coins and stamps. It applies even if you're clearly not running any kind of business and the item was simply something you owned.

The £6,000 is measured per item, not across everything you sold. Clearing £20,000 across two hundred sales doesn't bring this rule anywhere near you; selling one painting for £7,000 does.

You're taxed on the gain, not the sale price

The gain is what you sold it for, minus what you originally paid. Sell a £7,000 painting you bought for £6,500 and the gain is £500, not £7,000. If you inherited the item, you're treated as having acquired it at its value for Inheritance Tax — its probate value — or at market value if that figure isn't known, so an inherited item can still produce a gain if it has risen in value since.

The £3,000 annual exempt amount

Before any Capital Gains Tax is actually due, there's an annual exempt amount — £3,000 of gains a year for 2025–26. If the gain on the item is within that allowance, and it's your only gain for the year, there's nothing to pay. Plenty of people who sell one expensive personal item never end up owing anything once this is applied.

The relief that caps the gain: 5/3 of the excess

This is the part almost nobody knows about, and it's the part that usually does the work. For a personal possession sold for more than £6,000, HMRC caps the gain it will charge at five thirds — 1.667 times — the amount above £6,000. You work out your real gain, work out the cap, and use whichever is lower.

So an item that sold for £6,600 is £600 over the limit, and the most HMRC will ever treat as a gain on it is £1,000 (£600 × 5/3) — even if you were given it and your actual gain was the full £6,600. That £1,000 is then inside the £3,000 annual exempt amount, so there's nothing to pay at all. The cap only stops mattering once the sale price is far enough above £6,000 that your real gain is the smaller of the two figures.

What's exempt — and what isn't

Two things are outside this rule entirely. Your car, unless you've used it for business. And "wasting assets": anything with a predictable life of fifty years or less. Plant and machinery always counts as a wasting asset, and HMRC treats clocks and watches as machinery, which is why they're exempt however much they sell for.

Clothing is on neither list. There's no blanket exemption for it, and you shouldn't assume one. In practice a wardrobe clear-out almost never produces a taxable gain — but that's because individual items sell for far less than £6,000, and usually for less than you paid for them, not because clothes are outside the rule. If a single item of clothing genuinely sells for more than £6,000, check rather than assume.

What this rule isn't

This is entirely separate from the trading question covered elsewhere on this site. You can be selling your own unwanted possessions — not trading at all — and still have this rule apply to one expensive item, because it's about the value and type of the item, not about why you're selling it. Equally, someone who is trading has a different set of rules entirely for their trading income, and this Capital Gains Tax rule doesn't apply to stock bought to resell.

A worked example

Say you bought a painting years ago for £1,500 and recently sold it for £7,000. Your real gain is £5,500. Now the cap: £7,000 is £1,000 over the limit, and £1,000 × 5/3 is £1,667. You use the lower of the two, so the gain HMRC charges is £1,667, not £5,500. Take off the £3,000 annual exempt amount and there's nothing left to tax at all — assuming you made no other gains that year.

Push the price up and the picture changes. The same painting sold for £16,000 gives a real gain of £14,500 and a cap of £16,667 (£10,000 × 5/3), so the real gain is now the lower figure and it's the one that counts. After the £3,000 allowance that leaves £11,500 taxable. The rate depends on your income: the gain is added on top of your taxable income, and whatever sits inside the basic-rate band is taxed at 18%, with anything above it at 24%.