A client wishes to purchase a classic car (£150,000) as an investment through his Limited Company as opposed to him purchasing privately in his name. As this is my first dealing with this with this type of investment, I was wondering if any members have had any experience of this type of investment i.e privately owned against Company investment. Obviously I will do my own home work on this but any advice would be muchy appreciated.
Replies (13)
Please login or register to join the discussion.
Company
"Classic cars" and "investment" are not often words that appear in the same sentence.
Aside the really sought after cars, which would likely cost a large multiple of £150k, all I have ever seen is that old, sorry classic, cars are a money pit.
Cars are, I believe, deemed to be wasting assets and so exempt from CGT.
Look at the classic car market
Duncan, look at what's happened over the last few years. A quick example, Jaguar E Types have doubled in value or more in that time. Any quality classic car has gone up in value. If you can argue that multiple investments in classic cars by a company are just purchases of wasting assets, or you don't mind being partly an investment company, great. By investment I mean you stash them away and they don't get used. But another way is to enjoy running a classic as a company car so all its running costs are deductible and of course if you buy something that fits HMRCs definition of a classic car (over 15 years old with a market value of over £15K when I last looked) then the BIK is based on its value now.
Hi
I beg to differ. They might have doubled in price, but they sure as something very warm have not doubled in value.
Plastic fantastic
Ahh! The Tupperware Disaster! I tried the 1.8 turbo (I was at the time driving a Nissan Sylvia with the same engine). I thought it to be a savage little beast with all the grip of a ball bearing on a greasy mirror. Mine is at the bottom of the semi classic foodchain, a 1987 (future classic), Michelotti designed, galvanised chassis, fibreglass body, Reliant Scimitar SS1, 1600cc, cheap to buy, cheap to run, body does not rust though tracking electrical issues can be distracting, but at least loads of aftermarket support even now. A 1980s car built using 1970s technology.
Mine is fine
Ahh! The Tupperware Disaster! I tried the 1.8 turbo (I was at the time driving a Nissan Sylvia with the same engine). I thought it to be a savage little beast with all the grip of a ball bearing on a greasy mirror. Mine is at the bottom of the semi classic foodchain, a 1987 (future classic), Michelotti designed, galvanised chassis, fibreglass body, Reliant Scimitar SS1, 1600cc, cheap to buy, cheap to run, body does not rust though tracking electrical issues can be distracting, but at least loads of aftermarket support even now. A 1980s car built using 1970s technology.
A link to some Scimitar racing
http://www.rssoc-curborough.co.uk/RSSOC_Curborough.html
Mine is fine re road holding but then again only a 1600cc. The performance that some posters on the RSSOC site can get out of them is, I understand, pretty stunning and given they are cheap to buy there are a fair number that have raced (They do however burn rather brightly if petrol allowed into engine bay).
mine is an investment
I've invested blood, sweat and tears, not to mention £000's and building a garage to put it in. Cost per mile?
About £100 (but falling).
Value now?
Just a bit more than I spent on it
But there again MGB's are as rare as Hens teeth, aren't they. CGT free though!
Love not money
I've invested blood, sweat and tears, not to mention £000's and building a garage to put it in. Cost per mile?
About £100 (but falling).
Value now?
Just a bit more than I spent on it
But there again MGB's are as rare as Hens teeth, aren't they. CGT free though!
Chasing rust!! There is a charm to older cars that defies all logic re performance and comfort but I am afraid my lack of welding skills would likely preclude an MGB. Hence my fibreglass ugly duckling. (Also its price £400-£1,500 depending on condition-strange when only 1.500 ever made)
One of my employers has an interesting collection; Austin A40, Austin Healey 100, Austin Atlantic, Daimler Barker Special, Lagonda and a Sunbeam and used to also have an Alvis Speed 20, Healey Silvestone and a 1930s Rolls Royce. They were all stunning to look at but I doubt ,when he did the sums (if he ever did the sums), if he made anything on the ones he sold. He does not own them to make money he owns them because he loves cars.
But collectors are all different, we rent space to an individual for his E Type, Mk II Jaguar, MR2 and VW Scirocco. The latter two used to be his everyday cars but the first two, I believe, he has never driven.
some do appreciate
when I worked in finance in the early 1990's we put on HP a rare Ferrari bought by a famous pop impresario and model train enthusiast for about £3million. I dare say now that care would sell for £10 million
Maybe I could re-badge my BGT?
CGT point
Cars are exempt from CGT, but not because they are wasting assets - it's because they are a private motor vehicle and specifically exempt (s263 TGCA). If the exemption was because they were wasting assets then they could become chargeable if capital allowances were or could have been claimed and that would mean that the proposed investment inside a company would not be as efficient. I collect vintage musical instruments (and would like more) but they can be chargeable, as machines they are deemed to be wasting assets. Undoubtedly Eric Clapton, if UK resident of course, would have had a CGT liability when he sold his guitar known as "Blackie", a Fender Stratocaster assembled from parts for $100, for $959,000 as few years ago...
If you want to make money
with classic cars, it is possible. But you need nerves of steel and time; the market can be very volatile and a fortune can be lost very quickly (but it can also be made again). A client of mine many years ago had a wonderful collection and he still raced even the ones that were worth millions. And he ran it as a business.
Investment potential aside
If you prefer to run a classic car and your company can afford it, it makes sense. My car is now in relative retirement as the previous owner ran it as a company car for 15 years, and did 120,000 miles in it. He had no BIK issues as it was owned by an LLP.
Even if you don't make money it most classics are fairly depreciation proof and that's the biggest cost of running a new car. Take "tomorrow's classic" a 2005 Bentley Continental GT. Now the footballer and the second owner have finished with it the car is now worth £25K and has shed £100K in value (or price whichever way you look at it). It will never be worth much less. Don't try it as a company car just yet though as until its 15 years old it the BIK will be based on the price new!