Is a Private Sale Taxable?

I recently sold a Domain Name that I registered some years ago, which was meant for a non-business personal project. I didn’t get around to launching the website that I had intended to, and in the meantime I was contacted by a US company that desperately wanted the domain name. I managed to sell the domain for much more than I bought it for, much more. My question is, do I have to declare this private sale of a non-business item on my Tax Return? I’ve searched the Inland Revenue site for hours, but I can’t seem to find an answer. Are their any Tax experts out there that can help?
Thank you.

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4 Responses to “Is a Private Sale Taxable?”

  1. SimonC says:

    This could be quite a complex issue. The answer may be different it you owned the domain personally or if it was owned by a limited company. It may also make a difference when you originally bought it. This is because a domain name is "intangible" property. There are different rules for the taxation of intangible property acquired by companies after 2002.

    If you owned it as an individual then I think the position is much more straightforward.

    You didn’t buy the domain name with the intention of selling it on, so the proceeds are not "income" and will not be subject to income tax.

    As a one-off purchase the domain name is a "capital" item. Any proceeds from the sale will be charged to Capital Gains Tax (CGT). This is charged at 18% on the difference between the selling price and the buying price. You can also deduct any incidental costs related to the purchase or the sale.

    Your first £9,600 of chargeable gains in any year are exempt from CGT, so you will only have a liability if your profit was more than that.

  2. bennachie1 says:

    I would not have thought that this would incur a tax liability

    Capital gains tax
    When do I have to pay CGT?

    You may have to pay CGT if, for example, you:

    * sell, give away, exchange or otherwise dispose of (cease to own) an asset or part of an asset
    * receive money from an asset – for example compensation for a damaged asset

    You don’t have to pay CGT on:

    * your car
    * your main home – provided certain conditions are met
    * ISAs or PEPs
    * UK Government gilts (bonds)
    * personal belongings worth £6,000 or less when you sell them
    * betting, lottery or pools winnings
    * money which forms part of your income for income tax purposes

    How CGT is worked out

    CGT is worked out for each tax year (which runs from 6 April one year to 5 April the following year). It is charged on the total of your taxable gains, after taking into account:

    * certain costs and reliefs that can reduce or defer gains
    * allowable losses you have made on assets to which normally CGT applies
    * the annual exempt (tax-free) amount (the AEA) – this is £9,600 for every individual in the tax year 2008-2009

  3. raysor says:

    Presumably it would be taxable under CGT. Your allowance is £9600 p.a.

  4. tringyokel says:

    The domain was not acquired as part of a business nor with the intention of trading it so income tax is definitely out.

    I would have thought this would come under Capital Gains Tax unless any of the exemptions apply. Can a domain name be considered a chattel? I don’t know.

    But as the other answer pointed out you do have an annual exemption so it all depends on how much you sold it for.

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