Journal 012 – I’m in love with my car, got to feel for my automobile..

I’m in love with my car, got to feel for my automobile..

Our tax team recently reviewed some old planning provided to a client who just joined us. It got them thinking others might find it interesting. Stick with this, it’ll be worth it!

 

When the value of your capital increases, you get richer. When you sell something for more than you paid for it, you have a capital gain. Which usually means there’s a Capital Gains Tax (CGT) liability

 

That’s not a problem if assets are held in structures not subject to CGT, or where the assets themselves are exempt from CGT

If you sell an asset for less than you paid for it, likely you have a capital loss, which may be offsetable against gains

One asset purchase where you’re almost certain to lose money, is your car, but that’s exempt from CGT, so you can’t use your loss to offset gains elsewhere

In the car world, some cars are more equal than others. Not all lose money. Your Ford Focus likely will, your Ford GT40 likely will not

 

Buy the right cars as investments, wait as they increase in value, sell them, and there’s no CGT to pay! According to Google, in 2022 a 1955 Mercedes SLR Uhlenhaut Coupe sold at Sotheby’s for $135 million

 

Maybe there’s more to collecting classic cars than just a hobby. It’s not tax avoidance, by definition, as tax doesn’t apply. It’s the law

There’s still the problem of Inheritance Tax though. With tongue firmly in cheek, here’s one creative suggestion from 70’s rock band, Golden Earring:

I’ve been drivin’ all night, my hands wet on the wheel, there’s a voice in my head that drives my heel..

More sensibly, let our team of Chartered Tax Advisors review your CGT and IHT planning. Experience the Power of a FREE Hour here

Toodle pip

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