Brexit and how it affects you – don't miss our full analysis.
The big vote’s coming. Here are the big issues for the classic scene
The upcoming referendum, which takes place on 23 June, to decide on whether the UK will leave the European Union (EU) has inevitable consequences in store for classic car owners in the UK, regardless of the outcome.
Since the previous Labour government left office in 2010, it’s generally recognised that there has been greater recognition and appreciation of classic cars in Westminster. Many positive changes have been introduced without reference to legislation in the wider EU. Where historic vehicles have complex, recognised legal status in much of Europe with restrictions on use, Britain has welcomed the free movement of parts and vehicles without placing onerous limits on how we use our classic cars.
European tourism has boomed, and the import and export of cars and their components exploded in an easily-accessed international market. This has resulted in easy maintenance and a steady growth in values of classic cars. But should owners of classic cars welcome, or fear, Brexit?
The trade view
The free and easy trading of classic cars within Europe for us Brits – something we’ve enjoyed for more than a decade – could change, although by how much will come down to trade negotiators, if we choose to leave the EU.
Daniel Donovan, the founder of classic car dealer DD Classics says that the market is already on the move, and won’t settle until the result of the referendum is known on 24 June. However, you might be surprised by how it’s moving, and that’s as much down to turbulence in Europe as it is our own referendum.
‘Classic car investments face significant growth as financial markets wobble,’ Daniel says. ‘With these unparalleled levels of uncertainty facing the European continent right now, it is believed that we will see more investors focusing their sights on luxury items to retain a significant return on investment.’
Economist Roger Bootle says that traders who buy and sell abroad could benefit from Brexit, by looking favourably beyond Europe. ‘We would be free to establish agreements with markets such as China, Brazil, Russia and India through the World Trade Organisation,’ he says. All have fast-growing classic car markets.
Investment bank KPMG concluded it would be better for the car industry to remain in the EU. ‘The attractiveness of the UK as a place to do automotive business is defined by its membership of the EU,’ says its latest report.
Beyond the simple matter of buying and selling classic cars, there are implications for owners. Parts supply and costs are expected to increase if we leave the EU. For many, low-cost parts from Eastern Europe have had a significant impact on the running costs of classics. They are manufactured to a recognised quality standard, but are not currently affected by import duty.
The importer view
Should we vote to leave the EU, duty on imports would be expected to return in addition to VAT.
John Kulin, from classic car importer Golden Chariots certainly feels that this is the case, and that bringing cars in from Europe will end up costing more.
‘To import a vehicle from outside the European Union, individuals will have to pay VAT and a 10% duty on the value of the car,’ he says.
‘Someone importing a car from the inside the EU won’t have to pay VAT. So they’d just have to pay customs duty, transportation and a £55 fee to register the car in the UK.’
Then there’s the matter of what is – and what isn’t – a historic vehicle. When importing from the USA, there’s the issue of differing levels of duty for historic and non-historic vehicles. And it’s not based purely on the age of the vehicle.
Auctions and sales offer most scope for additional costs should we choose to leave the EU. Already expensive for individuals without a business to absorb the premiums and VAT or account for onward sale reliefs, the Government will be quick to see opportunity away from a unified market. Owners and auction houses could find an additional burden of work to account for different duties, and should the EU model continue to break down, an overall reduction in the value of classic cars could result as trade stagnates.