Quentin Willson
Apocalypse now? Quite possibly if the Treasury taxes classic car profits – let’s face it – none of us gets rich quick by selling old cars anymore…
Idon’t have any facts to support this but having had a nine-year wrestling match with the Treasury to keep a lid on fuel duty, I sense another ill wind blowing from their direction. Spiders are all that’s left in the Treasury cupboards and the Chancellor is planning a jumbo tax raid after spending so much to support the creaking Covid-19 economy. One of his targets is Capital Gains Tax or CGT, which you don’t need me to tell you doesn’t currently apply to any profit made on the sale of classic cars. This long-standing exemption has helped create a £7bn industry and tens of thousands of jobs. If in the past we’d had to stump up the 10 per cent to 28 per cent CGT on any capital gain we might have made on the sale of our cars, we very likely wouldn’t have bothered restoring so many, building a world-beating old car industry or creating so much economic activity around the hobby. It simply wouldn’t have been worth it and many of our classics would have just rusted away.
But let’s be clear, the days of making large dollops of profit on selling old cars have long gone. Most of us would get rather depressed if we really truly and honestly added up the cost of restoring, maintaining and preening our classics. These days you’re very lucky to just get your money back when you sell unless you’ve owned something for decades. But – and here’s my anxiety – there are those mandarins and special advisers in that grey building on Horse Guards Road who believe that classic car owners have benefitted from bundles of tax-free cash from the sale of their Bentleys and Lagondas for years and that they live in stately homes and always dress entirely in tweed. I exaggerate of course, but not by much. There is a dangerous perception that we are a group who enjoy an unfair tax concession. Over the last few weeks I’ve seen us described in the financial press as ‘investor hobbyists’ or ‘amateur vintage car investors’. If only…
So I’m just putting it out there that nobody is getting rich by selling their classic cars; and politely but firmly telling the Chancellor not to look at our sweet, gentle, innocent industry as a way to help fill the yawning sink hole in his finances by taxing us even more than he does already. The unintended consequences of any imposition of CGT on old car sales would be to wipe out our industry, destroy many thousands of jobs, raise very little in actual tax revenue and make voters of a certain age very, very cross indeed. The CGT exemption is that passenger cars and machinery are treated as ‘wasting assets’ with a life expectancy of less than 50 years that deteriorate and lose their value. If you’re interested in the technicalities they can be found in HMRC’S Internal Manual Section TCGA92/S263. Read it one of those nights when sleep is hard to find.
Our industry has weathered the Great Recession of 2008, the uncertainties of Brexit and now the seismic events of a global pandemic. We’ve held our hobby together with the glue of enthusiasm and knowledge but also because it was possible to partly fund a restoration thanks to some of our cars’ appreciation in value being free of tax. Impose CGT on the sales of classic cars and you’ll destroy this industry in a heartbeat. I wave an apocalyptic finger.