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.