Unlike normal motor cars, classic or vintage cars do not necessarily depreciate and might enjoy a significant increase in value during their period of ownership. This kind of purchase can be a great investment but there are sometimes tax implications in doing so. Our Accountants Bolton can help you calculate the tax implications.
More recently the holding of classic cars has become attractive not just for the enjoyment of their ownership but also as an alternative form of investment.
Another key advantage is that unlike other forms of investment such as stocks & shares and investment properties, they generally don’t attract capital gains tax if you enjoy a profit upon their disposal. The reason for this is that for capital gains tax purposes they are regarded as a ‘wasting asset’ with an estimated use for life of less than 50 years. Even if they remain in existence for a period in excess of 50 years the same wasting asset treatment applies.
This can be attractive in considering ones overall capital tax position in comparison with other investments which may attract capital gains tax at 20% or even 28% in some circumstances. On the other hand whilst any gain is not chargeable to tax if you were to lose money on such an investment any capital losses arising are not eligible for relief.
Other matters to consider include the cost of maintenance and insurance etc and care should be taken that such cars are held for investment purposes. If you buy and sell cars too frequently HMRC may regard you as trading and tax any profit as income.
If you’d like advice on this matter, please don’t hesitate to contact our Accountants Bolton on 01201 534 031 or contact us via our enquiry form.
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4 July 2019
With a major shake-up in the treatment of VAT in respect of building work is imminent – our Senior VAT Manager, Carolyn Van Hecke, highlights the implications for those in the construction industry and why it has never been so important to apply the correct VAT treatment.