Petition to reduce UK VAT on watches to 5% same as art and collectibles

pdxleaf · Feb 3, 2021

https://petition.parliament.uk/petitions/572127

Watches are treated like second hand goods. If they were treated as collectibles the VAT would be reduced.

This is a petition to ask for this adjustment. Only British citizens or UK residents have the right to sign.

I am not affliated with this initiative nor have I researched the details about who is behind it. It appears to be legit and something worth pursuing so I am passing it on as if true, it could greatly reduce costs.

inchpincher · Feb 3, 2021

As someone who just paid a nice 20% chunk on a Constellation yesterday I’m more than happy to sign. Good spot.

TimeODanaos · Feb 3, 2021

Absolutely excellent citizen initiative. Dont ask, dont get! Is the lead petitioner a member here, I wonder?

w154 · Feb 3, 2021

I’m still sure about this. It requires a better understanding of all taxes to understand if this will lead to a better or worse situation for collectors. I’d want to know for certain before signing.

My concern specifically relates to the fact that watches are categorized as wasting assets, which means they avoid certain taxes completely at the moment (I think capital gains for example). People should understand the whole situation before signing the petition.

TimeODanaos · Feb 3, 2021

w154
I’m still sure about this. It requires a better understanding of all taxes to understand if this will lead to a better or worse situation for collectors. I’d want to know for certain before signing.

My concern specifically relates to the fact that watches are categorized as wasting assets, which means they avoid certain taxes completely at the moment (I think capital gains for example). People should understand the whole situation before signing the petition.

I think there is an inconsistency between the capital tax treatment and import tax (which uses the "VAT" tag as a flag of convenience, IMHO), but that's because the new import regime was not thought through properly, rather than for any hidden rationale. Perhaps experts would like to comment?

Ness · Feb 3, 2021

Something needs to done, and initiatives like that are worth a shot.

OllieOnTheRocks · Feb 3, 2021

yes that crossed my mind but if it's a wasting chattel, which is defined as tangible moveable property; for example, jewellery; antiques; yachts; books; wine; clocks; etc art and collectibles should surely fall into this same alignment, and therefore be capital gains exempt for personal items, unless proceeds are over £6,000.

Alpha · Feb 3, 2021

Now 340 signed but every little helps, unfortunately given the state of the coffers in the UK I don't hold out a lot of hope 🙁

khanmu · Feb 3, 2021

TimeODanaos
I think there is an inconsistency between the capital tax treatment and import tax (which uses the "VAT" tag as a flag of convenience, IMHO), but that's because the new import regime was not thought through properly, rather than for any hidden rationale. Perhaps experts would like to comment?

Capital gains is a direct tax, and as such is paid on profit made, to the Govt. As @w154 says, in the UK, watches sold as personal property are exempt, and in other cases you only pay CGT on profit on items sold above £6000 for certain asset classes. You also have an annual CGT allowance, which this year is I think circa £12000 (it’s a little more involved than this, but those are the general principles)

VAT is an indirect tax charged on consumption of good and services (amount charged depends on personal vs business, on the product and the applicable rate) and which can be passed up the chain. The Govt doesn’t care who pays it as long as someone eventually does. For example, in the case of a non-UK seller, sending me a watch, they can choose to include the UK VAT on the selling price, and remit that to the courier to pay on entry to the UK - when I send watches abroad by UPS, it has for example a “who pays import charges” option, “sender / receiver”.

So a VAT exemption for watches should not result in a CGT exemption as they are two different taxes and apply in different ways, but I guess that depends if you trust the whims / competence of the UK govt.

I signed the petition, though I wished they had included wine in the exemption list...

w154 · Feb 3, 2021

OllieOnTheRocks
yes that crossed my mind but if it's a wasting chattel, which is defined as tangible moveable property; for example, jewellery; antiques; yachts; books; wine; clocks; etc art and collectibles should surely fall into this same alignment, and therefore be capital gains exempt for personal items, unless proceeds are over £6,000.

“A wasting chattel is a chattel with a useful life not exceeding 50 years. Useful life is determined at the date of acquisition, having regard to the purpose for which the chattel was obtained. A chattel which is wasting will be exempt from capital gains tax and any losses on it will not be allowable.”

I don’t see that paintings, sculptures, etc can be described as such, whilst watches obviously can be. And for me, I think I’d prefer exemption from capital gains than 20% import on purchases. I can always buy stuff domestically, and prices here may be lower as we’ll lose all the potential European buyers.

khanmu · Feb 3, 2021

w154
“A wasting chattel is a chattel with a useful life not exceeding 50 years. Useful life is determined at the date of acquisition, having regard to the purpose for which the chattel was obtained. A chattel which is wasting will be exempt from capital gains tax and any losses on it will not be allowable.”

I don’t see that paintings, sculptures, etc can be described as such, whilst watches obviously can be. And for me, I think I’d prefer exemption from capital gains than 20% import on purchases. I can always buy stuff domestically, and prices here may be lower as we’ll lose all the potential European buyers.

Most likely because the Govt sees how much it makes when Granny discovers a Rembrandt or Vermeer in the loft, but hasn’t quite (yet) caught up with the idea of watches being valuable items that have a longer than 50 year life span. Sadly it’s probably only a question of time, given what pre-moon Speedies are going for, never mind vintage Daytonas.

I am curious to see what will happen to “mid-market” vintage UK prices in the long term - they might decline, as non EU buyers avoid the extra cost and hassle of UK purchases. Then again they might also go up, as UK buyers compete for/focus on UK watches in order to avoid import costs too..

w154 · Feb 3, 2021

khanmu
I am curious to see what will happen to “mid-market” vintage UK prices in the long term - they might decline, as non EU buyers avoid the extra cost and hassle of UK purchases. Then again they might also go up, as UK buyers compete for/focus on UK watches in order to avoid import costs too..

I wondered the same for the same reasons. I guess it should all balance out, with the exception being watches that are concentrated in either the UK or Europe, yet have demand in both regions.

An example would be a European that wants to buy a Smiths watch like a W10. I think prices for W10s located in Europe are likely to increase slightly as 90% of the supply will suddenly have around 20% tax added on. That may knock down prices in the UK slightly.