HMRC has issued guidance to those lucky enough to get their hands on an Olympic torch, reminding us that tax permeates every possible aspect of daily life.

If the torch is worth less than £6,000 when sold, there will be no Capital Gains Tax (CGT) on the proceeds. However, if it is worth more than £6,000 then a chargeable gain will arise which may result in a CGT liability, depending on whether or not the individual has other gains in the tax year. The rate of any CGT payable will depend on the individual's level of income.

HMRC also state that it should be borne in mind the possibility that selling the torch might be, or might be part of, a trade, in which case any profit would be charged to Income Tax rather than CGT. It is stressed that people who occasionally sell a few personal possessions to raise some cash are not trading, but the things sold may still give rise to taxable gains as previously explained. However, if someone regularly sells goods or services, they are likely to be trading and will be liable to Income Tax on their trading profits.

Remember, one of HMRC's current disclosure campaigns is targeted at e-marketplaces and is seeking disclosures from people who are trading online through an online marketplace, but aren't and haven't paid the right amount of tax.

More information is available at http://www.hmrc.gov.uk/news/olympic-torch.htm and http://www.hmrc.gov.uk/campaigns/emarket.htm