Don’t risk HMRC fines.
Want to know the tax implications when you sell a classic car in the UK? Whether you’re swapping out your BMW Alpina for something new or you simply no longer need a vehicle altogether, there are a few things you should know before selling up!
Some argue that once a car is 25 years old, it automatically becomes a classic car; some say 30 years and others say 40. Some even argue a classic car depends on the make and model just as much as the age.
As you can see, there is no general agreement. But HMRC will consider your car a classic if it meets these two requirements:
But not all cars over 15 years old are classed as classic. Many people aren’t aware, but there are multiple categories for old vehicles, including vintage, veteran and post-vintage cars.
We know, it’s a lot to take in! So here’s a quick breakdown:
CGT only applies to valuable assets such as:
This basically means HMRC doubts you will make a profit from selling your car, and for this reason, if you do prove them wrong, you get to keep all of your gains! So it’s a win-win situation really!
Not so fast! This is where it can get a little techy.
Yes, you can buy a classic car, use it for normal day-to-day driving, decide you no longer want it for whatever reason and sell it. You won’t have to pay tax for this.
But if HMRC suspects you are purchasing classic cars and selling them with the sole intention of making a profit, this is classed as trading. And it’s taxable at either 25% or 19% depending on how much is earned.
This is called Corporation Tax.
You may have escaped Capital Gains Tax, but all cars, including classic cars, still require vehicle tax (also known as road tax).
However, there is an exemption – if your car is 40+ years old (manufactured more than 40 years before 1st January of that year) you will no longer have to pay to tax your vehicle.
Bear in mind that vehicle tax is the responsibility of the registered owner.
If you’ve had a car for over 25 years, then you have probably been driving long enough to remember the days when you could transfer your existing tax to another vehicle, however, this is no longer the case.
So, once you’ve said your goodbyes to your vehicle:
Capital Gains Tax, Corporation Tax, Vehicle Tax… it can all be a bit mind-boggling. That’s why we offer a range of services that ensure you won’t have to deal with the tricky stuff! Check out our services here.
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