OnTax Accountants Dunfermline Consider:

Getting The Taxman To Pay For Your Classic Car

If You Love Classic Cars As I Do Then This Will Tickle You!
Owning A Classic Car Via A Ltd Co Is Tax Efficient!

Can Classic Cars Be Tax Deductible?

We Are Accountants Dunfermline Business Love!

OnTax Accountants Dunfermline were asked by a client whether a classic car could be bought tax effectively. Naturally, OnTax Accountants Dunfermline being Fifers by definition, we were happy to look further into this! The cost of running a classic car can be extortionate!

Ontax Accountants Dunfermline would emphasise though that if your limited company owns the car it can claim these costs against its corporation tax bill. The downside is that this can lead to a benefit in kind (BiK) tax charge for you. Now, we at OnTax Accountants Dunfermline scratched our heads as to a way around this and the answer may well surprise you!

What Counts As A Classic Car?

Ontax Accountants Dunfermline, checked the HMRC definition of a classic car and it is one that is at least 15 years old from registration and has a market value of at least £15K. Ontax Accountants Dunfermline advise that cars fitting this scenario are taxed on market value.

Now a certain thought crossed our minds at OnTax Accountants Dunfermline. What if the car was over 15 years old but had a market value of less than £15K? Take for example the classic car that in 1962 cost £500 but is now worth £9000.

Yes Mr Taxman, You DID Buy Me That E-Type Jag!

How To Pay £25 Tax On A Classic Car!

You see, most company cars are subject to a Benefit in Kind tax based on CO2 emissions coupled with its original list price. But, say OnTax Accountants Dunfermline, if that car does not have an emission rating, being a 1962 model, an alternative method of calculating Benefit In Kind Charges must be used i.e engine size. Now our 1962 classic may be 1600cc so the BiK rate is 25% of list price. The cool bit is that it is the original list price that is used not the current market value so...25% of £500 is £125 is the benefit in kind tax benefit and as a 20% tax payer your tax on this is £25 per annum! The company of course will be required to pay class 1 Ni of £17.25. Outrageous or what!

Do remember though to pay for the fuel you use in private motoring yourself otherwise you could automatically be liable to a £4,500 BiK charge even if its only a few pounds of private fuel. Further, OnTax Accountants Dunfermline strongly advise you to sell the car before its price exceeds £15K in order to avoid tax surprises.

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