Q: My mother has given me a diamond necklace that was owned by my great-aunt, and asked me to sell it and divide the money with my siblings. How can I find out how much it is worth and find the right buyer? And what is the tax situation?
A: I am guessing the necklace is worth a substantial amount of money if it is to be sold and divided up. Have you looked on the internet to see if there are any comparable necklaces for sale to give you an idea of value before you get started?
First off you need to get a valuation. If you don’t have a jeweller you use regularly, then a list of registered valuers is available on the National Association of Jewellers website, naj.co.uk .
There will be a charge to value the necklace as the jeweller will have to examine each diamond individually and also look at the setting. It may be worth contacting a couple to get the best price. Once you have a value you can choose the best way to sell it.
Auction houses have jewellery sale days, though many are virtual at the moment because of Covid restrictions. I would probably start with your local auction house as it may be cheaper to sell through than one of the bigger auctioneers such as Sotheby’s or Bonhams. You will have to pay a commission and fees to the auction house if they sell it on your behalf. Alternatively the jeweller who valued your necklace may be able to sell it or recommend the best route to a sale.
On the tax side, if your mother inherited the necklace from your great aunt within the last two years, then she can make a deed of variation which writes it back into your aunt’s will for tax purposes. This has the effect of taking the gift out of your mother’s estate should she die within seven years so there will be no inheritance tax to pay on it. If not it is treated as a potentially exempt transfer (PET) and will be included in her estate for tax purposes for seven years.
Louise Higham, chartered financial planner at independent financial adviser Tilney said: “In terms of capital gains tax (CGT) you do not pay this on personal possessions if they are sold for less than £6,000. The gain on the necklace may be difficult to calculate if it was inherited and not valued at probate, and they may not have the original receipt of purchase.
“For gains between £6,000 and £15,000 special rates apply. You will either pay tax on the actual gain or five thirds of what you sold it for less £6,000. You choose whichever is lower.”
So, for example, a sale price of £10,000 less £6,000 is £4,000. Five thirds of £4,000 is £6,666 which would be the gain used to calculate any tax liability if the actual gain is not known or is greater than £6,666.
However everyone can make £12,300 profit (in this tax year) before having to pay CGT — the CGT annual allowance — so no tax would be owing.
If the gain does attract CGT then it will be for your mother to pay rather than you and your siblings.
