Classic cars - CGT

LynWest
LynWest Registered Posts: 122 ? ? ?
Just a quick question. A client has said that he has bought and sold a couple of Ferrari's in the last year and earned a small profit. However, it totals more than the CGT annual allowance. I do not do a lot of CGT work. However, somewhere in the back of my brain i seem to remember that classic cars are exempt from CGT? Does anyone know if that is right please?

Comments

  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Yes, all cars (not used for business) are exempt from CGT.
  • LynWest
    LynWest Registered Posts: 122 ? ? ?
    Thannks Marie x
  • KernowAccountant
    KernowAccountant Registered Posts: 103 ? ? ?

    Yes, all cars (not used for business) are exempt from CGT.

    This implies that "cars" will be chargeable assets if used for business purposes. That is not correct, all "cars" falling within s.263 TCGA 1992 are exempt assets regardless of business use.
  • KernowAccountant
    KernowAccountant Registered Posts: 103 ? ? ?
    edited September 2015
    LynWest said:

    Just a quick question. A client has said that he has bought and sold a couple of Ferrari's in the last year and earned a small profit. However, it totals more than the CGT annual allowance. I do not do a lot of CGT work. However, somewhere in the back of my brain i seem to remember that classic cars are exempt from CGT? Does anyone know if that is right please?

    Have you considered wether your client could be trading (and hence such profits subject to income tax)? A single transaction could amount to a trade.
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    edited September 2015

    Yes, all cars (not used for business) are exempt from CGT.

    This implies that "cars" will be chargeable assets if used for business purposes. That is not correct, all "cars" falling within s.263 TCGA 1992 are exempt assets regardless of business use.
    Sorry this wasn't clear. I was going to write all cars until I checked the .gov website which states
    "You don’t pay Capital Gains Tax on:
    your car - unless you’ve used it for business [...]"


    I think they meant what you have rightly pointed out in your last comment.
  • LynWest
    LynWest Registered Posts: 122 ? ? ?
    Thanks all. He has said that he is not classed as a trader until he sells 6 cars a year? Not sure if this is for him needing to guarantee the condition of the cars when he sells them as he is expected to have knowledge of cars or from a tax point.

    When he mentioned it to me i said my gut feeling was that they were exempt however, if he is buying in order to turn them around and make a profit HMRC might decide that he is trading and therefore it is income. However, i said that i would look into it further for him.

    He has bought 3 ferrarri's (nice, wish i could) and sold two of them. I suppose it comes down to his intentions when he bought them. He says that he is not going to sell the third, but keep it for his children. If he continues to buy them, then he is going to start to have trouble convincing HMRC that it is not an income stream.
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