Auction fees and buyer's premium explained
Hammer price, buyer’s premium, seller’s commission and reserve, explained for UK sellers, with a worked example of what you actually receive.
When a painting sells at auction, three figures matter: the hammer price, the buyer's premium and the seller's commission. Only the first reaches you, and only after the commission and other charges have come off it. This guide explains each term as UK salerooms use it, what else is deducted, and how to work out your own figure before you sign a consignment agreement.
What is the hammer price?
The hammer price is the winning bid at the moment the auctioneer's hammer falls. It is the price of the lot itself, before any fee is added for the buyer or taken off for the seller. Auction results published online are sometimes hammer prices and sometimes include the buyer's premium, so check which you are reading before you compare a result with your own work.
What is the buyer's premium?
The buyer's premium is a charge the auction house adds to the hammer price and collects from the buyer. It is the saleroom's fee for selling to the buyer, and it does not come out of the seller's proceeds. Most houses charge it on a sliding scale, with one percentage on the hammer price up to a threshold and lower percentages on the portions above it. VAT may be charged on the premium as well, depending on the lot and the buyer.
The premium still matters to a seller. Experienced bidders set their limit as a total, hammer price plus premium plus any tax, so a higher premium tends to mean a lower hammer price. Rates change, often every year, so read the current terms of each house you are considering.
What is the seller's commission?
The seller's commission is the auction house's fee to you, deducted from the hammer price. It is usually a percentage, and VAT is added to it at the standard rate, currently 20% (gov.uk). Published seller's rates are a starting point. For a work the house wants to sell, commission is negotiable and can be reduced a long way, sometimes to nothing. Many houses also set a minimum commission per lot, which weighs most on lower-value works.
Other seller's charges
Depending on the house and the agreement, you may also pay for:
- insurance while the work is in the house's care, often a percentage of the hammer price or of the estimate
- photography or catalogue illustration
- packing, transport and storage
- an unsold fee if the work fails to sell, and a withdrawal fee if you take it out of the sale after signing
Each of these is set out in the consignment agreement, and each can be negotiated before you sign.
Estimates and the reserve price
The estimate is the range printed in the catalogue, for example £8,000 to £12,000. It guides bidders and reflects the house's judgement of the market; it is not a valuation for insurance or probate.
The reserve price is the confidential minimum below which the work will not be sold. Seller and house agree it before the sale, and it is normally set at or below the low estimate. If bidding stops short of the reserve, the lot is "bought in", which means unsold. That usually costs the seller an unsold fee, and the result is recorded in the price databases buyers consult, which can make the work harder to sell next time.
Artist's resale right
If the artist is alive, or died less than 70 years ago, a royalty called the artist's resale right may be due. In the UK it applies when the sale price is £1,000 or more and an art market professional, such as an auction house or dealer, is involved. It runs on a sliding scale from 4% of the first £50,000 down to 0.25% of anything above £500,000, and is capped at £12,500 for a single sale (gov.uk). The Design and Artists Copyright Society (DACS) and the Artists' Collecting Society (ACS) collect it and pay it to the artist or their estate.
The law makes the seller liable for the royalty, together with the auction house or dealer, but many salerooms add it to the buyer's invoice instead. Ask which applies before you consign.
What you actually receive: a worked example
The rates below are illustrative assumptions for a £10,000 hammer price, not any saleroom's published terms.
| Seller's account | Amount |
|---|---|
| Hammer price | £10,000 |
| Seller's commission at 10% | −£1,000 |
| VAT on the commission at 20% | −£200 |
| Insurance at 1% of the hammer price | −£100 |
| Photography | −£100 |
| Paid to you | £8,600 |
On the same lot, with an assumed buyer's premium of 25% and VAT on the premium, the buyer pays £13,000: the £10,000 hammer price, £2,500 premium and £500 VAT. The difference between what the buyer pays and what the seller receives is £4,400, or 44% of the hammer price. The seller is paid once the buyer has paid in cleared funds, commonly around a month after the sale; the agreement should state the date.
Tax when you sell a painting
Capital Gains Tax can apply if you sell a personal possession, including a painting, for £6,000 or more and make a gain (gov.uk). If the sale price is between £6,000 and £15,000, the gain may be reduced (gov.uk). If you inherited the work, the gain is measured from the value it was given for Inheritance Tax, and selling costs such as the auction commission can be deducted. A tax adviser can confirm how the rules apply to you.
Questions to ask before you consign
- What is the seller's commission, and is VAT added to it?
- Is there a minimum commission per lot?
- What will insurance, photography, transport and storage cost?
- What is the reserve, and what is charged if the work does not sell?
- Who pays any artist's resale right?
- When will I be paid, and is that date in the agreement?
- What net figure will I receive if the work sells at its low estimate?
Quick answers
Does the buyer's premium come out of the seller's money? No. The auction house adds it to the hammer price and charges it to the buyer.
Can I negotiate the seller's commission? Yes. Published rates are a starting point, and houses regularly reduce commission for works they want.
What happens if my painting does not reach its reserve? It is bought in. You keep the work, may pay an unsold fee, and the unsold result becomes public.
Who pays the artist's resale right in the UK? The seller is liable in law, together with the auction house or dealer, though many salerooms charge it to the buyer.
How Whitebank Fine Art can help
We act for the seller, not the auction house. We compare what the major salerooms would do for your work, including their sale dates and terms, negotiate a reduced seller's commission on your behalf, and set out the net figure from each. Where a confidential private sale would serve you better, we say so and can arrange it. The paperwork stays in your name throughout.
A valuation is free and carries no obligation to proceed. For every fee that can come off the hammer price, see what selling at auction costs.
