Capital Gains Tax (losses) on boats

[PEJ]

Can any tax gurus tell me if you can offset the loss you make when you sell your boat against any capital gains you may have to declare on your tax return?

If you knew you were about to make a biggish capital gain should you sell your boat to offset the capital gains tax and then buy a new boat later?

 

[MVP]

I believe boats, like cars, are not covered by capital gains / losses

 

[Garold]

I would be so excited if you find anything.

This is the Holy Grail.

So, I shall watch this thread with interest.

Just in case.........

Cheers

Garold

 

[OAF]

I have a company that is dedicated to buying and selling boats, there is definitely no capital gains applicable with the sale of a boat, (unless I am proved wrong), I needed to confirm this position last week and my accountants checked it out and confirmed the same.

 

[Nick_H]

No, boats bought for personal use are classed as wasting assets and are exempt from CGT, so you neither pay CGT if you sell at a profit, nor can you offset other gains if you sell at a loss.

 

[Nick_H]

I have a company that is dedicated to buying and selling boats, there is definitely no capital gains applicable with the sale of a boat, (unless I am proved wrong), I needed to confirm this position last week and my accountants checked it out and confirmed the same.

If your company buys and sells boats then that is your trade, and you would pay Corporation Tax on your profits, which would be the gain on the sale of the boats, plus any other revenue you receive, less your allowable expenses.

If you bought and sold boats personally to make money, then I believe it would likely be classed as an "adventure in the nature of trade", and you would pay income tax on the profits.

 

[OAF]

If your company buys and sells boats then that is your trade, and you would pay Corporation Tax on your profits, which would be the gain on the sale of the boats, less your allowable expenses.

If you bought and sold boats personally to make money, then I believe it would likely be classed as an "adventure in the nature of trade", and you would pay income tax on the profits.

Correct, my company pays corporation tax as is the norm with a limited company, but it does not pay capital gains tax on the sale of the boats.

 

[ProDave]

An asses is only considered for capital gains if it is an "investment". Things like cars, boats, and your house are excempt.

Perhaps if the boat was bought as a business asset and was used as part of a business, then it's eventual sale may be eligible. But if that's the case, there are other ways of writing down the value of the asset in your yearly accounts, so it probably does not count for CGT.

Nice try, but of course if you do find a way, let us know

 

[Tranona]

An asses is only considered for capital gains if it is an "investment". Things like cars, boats, and your house are excempt.

Perhaps if the boat was bought as a business asset and was used as part of a business, then it's eventual sale may be eligible. But if that's the case, there are other ways of writing down the value of the asset in your yearly accounts, so it probably does not count for CGT.

Nice try, but of course if you do find a way, let us know

But if it were used in business it would be depreciated and there would be a loss or gain on disposal of the difference between the book and sale value. The proceeds would be the new asset - in cash form rather than a boat.

 

[Nick_H]

An asses is only considered for capital gains if it is an "investment". Things like cars, boats, and your house are excempt.

I think you got the right answer, but for the wrong reasons

Many people clearly see their houses as an investment, but your main house is exempt from CGT under the Principal Private Residence exemption. Cars and boats are exempt under entirely different rules, because they have a predicted useful life of less than 50 years, and are therefore classed as "wasting assets". To illustrate the difference, you would pay CGT if you made a profit on the sale of a second home, because it's not your PPR, but you wouldn't pay CGT if you made a profit on the sale of a second boat, although if you habitually bought and sold boats, you may be deemed to be carrying on a trade, and the profits would be classed as income.

This is all to the best of my knowledge, and i'm happy to be corrected by the experts on here.

 

[jfm]

Nick h you are exactly right, though pedantically it is not the mere fact it is a "wasting asset" (<50yrs) that makes the gain/loss exempt, it's that it is a moveable wasting asset. A 49 year lease over land is " wasting" but not cgt exempt because not moveable

Boats can last over 50 years but the rule is more complex than that and so boats are always taken as < 50 hrs life hence losses and gains are cgt exempt on private non business asset boats

 

[jfm]

Correct, my company pays corporation tax as is the norm with a limited company, but it does not pay capital gains tax on the sale of the boats.

No uk company ever pays cgt. It would pay ct if it sold a business-use boat for more than its tax depreciated value. Of course, in overall terms that gives a company tax relief potentially on the cost of boat ownership, hence somewhat popular.

If a uk company sold a boat for more than it cost it would pay ct on the capital gain

 

[jfm]

I have a company that is dedicated to buying and selling boats, there is definitely no capital gains applicable with the sale of a boat, (unless I am proved wrong), I needed to confirm this position last week and my accountants checked it out and confirmed the same.

You need some new accountants. Good luck

 

[OAF]

If a uk company sold a boat for more than it cost it would pay ct on the capital gain

As I said the company pays CT on the CG as it is a business, but it does not pay CGT on the sale of a boat for the reasons you have allready stated, therefore my accountants are correct, are they not?

 

[jfm]

As I said the company pays CT on the CG as it is a business, but it does not pay CGT on the sale of a boat for the reasons you have allready stated, therefore my accountants are correct, are they not?

I'm not sure now what your accountants have advised. You said capital gains "not applicable", but a company most certainly is taxable on capital gains. If company buys boat for 100 and sells for 110 it will pay corporation tax at normal rate on the 10 gain if it is not a trading profit, or on the 10 trading profit if it is a trading profit. The rules for computing the 10 differ according to whether it's trading or not: the 10 could be 9 or 11. Being pedantic a company never pays cgt; it can pay corpn tax on capital gains, but obviously that's quite pedantic

 

[OAF]

I apologise if was misleading in my original statement, you are most definitively right, a company does of course pay Tax on its capital gains.

I had a situation recently where I sold a boat that belonged to me that was outside of my companies and the question was raised about Capital gains tax on boats, this is where my accountants advised that there is no requirement to pay CGT on boats if owned personally, my company that deals in boats does pay corporation tax of course.

 

[jfm]

I apologise if was misleading in my original statement, you are most definitively right, a company does of course pay Tax on its capital gains.

I had a situation recently where I sold a boat that belonged to me that was outside of my companies and the question was raised about Capital gains tax on boats, this is where my accountants advised that there is no requirement to pay CGT on boats if owned personally, my company that deals in boats does pay corporation tax of course.

Ah ok all understood
I must say, to be worried about tax on boat ownership profit is an awfully good quality problem

 

[BartW]

Can any tax gurus tell me if you can offset the loss you make when you sell your boat against any capital gains you may have to declare on your tax return?

If you knew you were about to make a biggish capital gain should you sell your boat to offset the capital gains tax and then buy a new boat later?

my boats are in a small company,
this company rent the boats to private persons including to myself, (bare boat charter)
unfortunotly that part of the company is not profittable
but luckyly there are other activity's in the company that are profittable,
the losses on the boats are well covered by the income from the other activity's, even a lot bigger, so the company pay's profit tax,

I' am aware that there are some edges on this, but after all this company pay's enough tax to keep the taxman happy.

whenever I would sell a boat and make profit on the sale I would be VERY happy to pay the profit tax

 

[MapisM]

to be worried about tax on boat ownership profit is an awfully good quality problem

Yup. Either that, or just a tax elusion problem, coming to think of it...

 

[PEJ]

Bummer!

OP here!

Thanks for the replies and especially to JFM for coming in on the thread to put us right.

But I was rather hoping that I could do some CGT loss offsetting on a gain from somewhere else. Bloody tax man, gets you all ways round.