Brexit VAT and Duty will hit classic car buyers
Classic car buyers looking to snap up a stunning European bargain can expect to pay up to 30% more once the UK leaves the EU.
Existing non-EU rules could see the importing of classic vehicles come with a hefty 20% VAT charge together with an additional 10% import duty.
The charges come as the prices of classic cars and motorcycles have soared in recent years and ownership a popular pastime.
Our research explores the investments and later life planning of over 1000 people aged over 35 in the UK and published in our report, Planning for your future, in November points to 15% of individuals owning and enjoying classic cars and motorcycles.
Colin Laidlaw, Director of VAT at Kreston Reeves said: “The cost of buying and importing a classic car or motorcycle from continental Europe is set to become even more expensive. The bargain classic for sale in Europe may come with a new 20% VAT and 10% duty charge, mirroring the cost of buying and importing classic vehicles from the rest of the world.”
But there are, says Colin, important exemptions for vehicles that are of ‘historical interest’.
“Vehicles that HMRC consider to be of historical interest may qualify for a reduced rate of VAT of just 5% and a nil-rate duty but comes with tough criteria to meet.
“A vehicle must be over 30 years old, be in its original state, no longer in production, and, importantly, have what HMRC calls the ‘requisite characteristics for inclusion in a collection’. HMRC defines this as meaning being relatively rare and used outside of its normal purpose.
“Vehicles that are involved in motor racing, built for competition and having achieved sporting success also qualify.”
Colin adds: “This exemption has been tested in courts and it is unlikely that an everyday classic bought and imported into the UK from Europe or elsewhere would qualify.”
If you would like to discuss any of the topics explored above, please contact Colin.
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