Some classic cars have proved to be extremely wise and remunerative investments having increased by considerable sums in recent years. In fact in the last 10 years classic cars have on average risen by around 395 per cent whereas the FTSE 100 has only increased by about 94 per cent – a significant difference.
Depending upon the capital gain you had made in the stock market when selling your shares you may have found yourself facing a significant liability in respect of capital gains tax (CGT). Higher rate taxpayers pay CGT of 28 per cent whilst others pay at a rate of 18 per cent.
Well, one of the great things about classic cars is that they do not attract capital gains tax that is a huge potential financial benefit to classic car lovers. Yes-we appreciate that for many classic car enthusiasts it is not about the potential profit they can make on a vehicle. There are so many other benefits such as the feeling of driving such a beautiful car and the pleasure derived from owning such a vintage model.
The profit made should you sell your classic car is not subject to capital gains tax because it is deemed to be a passenger vehicle and a wasting asset. A wasting asset is something that is unlikely to last for more than 50 years such as fine wine and antique clocks.
A word of caution, however, should HM Revenue and Customs believe that you are buying and selling classic cars with the sole intention of making a profit then you could be treated as a classic car trader and you could find yourself being liable to pay tax on some of your profits.
Anyway, the important thing is that you continue to enjoy your prized asset that you may well have spent many years restoring to return it to its former glory.