Making a profit on a boat.

[pheran]

If you're fortunate enough to sell your boat for more than you paid for it, does the difference between buying and selling prices count as a chargeable gain for CGT purposes? If so, what expenses or allowances are you allowed to set against this notional profit?

 

[acbruce]

I think that you will find that, as a wasting asset, gains OR LOSSES are not chargeable to CGT. The caps is to explain why the taxman doesn't come near boats or cars!

Of course, if you trade in boats or cars then you may be liable to tax on your profits.

 

[Nick_H]

As I understand it, if you bought a boat as an individual, and your intention at the time you bought it was to sell it on for a profit, this may be classed as "an adventure in the nature of trade", and you may be liable to tax on the gain, though it would be income tax, not CGT. As with all things tax, you may end up having to prove it wasn't your intention, rather than HMRC having to prove it was. I doubt it would be an issue unless you are a serial boat changer and/or own mulitple boats, and it may be completely below HMRC's radar anyway.

I'm not 100% on this, and happy to be corrected

 

[Chris_d]

It used to be with cars a limit of 6 per year I think before you were technicaly a trader and the taxman is interested. I've sold every boat I've ever owned for more than I paid for it and wouldn't dream of declaring it. However they were always second hand and I keep boats a few years. However I don't expect to sell the latest one for more as prices are as low as I've ever seen them

 

[Fantasie 19]

If you're fortunate enough to sell your boat for more than you paid for it, does the difference between buying and selling prices count as a chargeable gain for CGT purposes? If so, what expenses or allowances are you allowed to set against this notional profit?

My chargeable gain just about bought two pints of Jaipur.. now I'm worried I should have reported it to the inland revenue.... no good to them mind, I suspect they are Banana Daiquiri drinkers....

 

[PEJ]

My understanding is that boats are a depreciating asset. This means you can't offset your losses against CGT (bummer!). But the flipside is you can't be stung for CGT if you do make a gain.

 

[npf1]

Does anyone make a real profit on a boat after considering all related costs?

 

[ari]

It used to be with cars a limit of 6 per year I think before you were technicaly a trader and the taxman is interested.

Bit of an Internet forum urban myth that one I believe.

If you're a motor trader car one counts.

If you trade your car in at the local BMW dealer every week (or sell it privately and buy another one) instead of cleaning it the tax man won't be interested.

 

[Chris_d]

Bit of an Internet forum urban myth that one I believe.

If you're a motor trader car one counts.

If you trade your car in at the local BMW dealer every week (or sell it privately and buy another one) instead of cleaning it the tax man won't be interested.

Yes I'm sure its a bit made up and there is no number but I'm going back 30 years pre-internet, knew many people who used to do up the odd car and sell it on for profit.
I think 6 came from Autotrader who only allowed you 6 ads a year then you had to declare you were trader.

 

[gordmac]

Bit of an Internet forum urban myth that one I believe.

If you're a motor trader car one counts.

If you trade your car in at the local BMW dealer every week (or sell it privately and buy another one) instead of cleaning it the tax man won't be interested.

Don't think you will be making much profit doing that!
Six used to be the number you had to sell to get a traders insurance policy. I suspect it is the number the taxman would use.

 

[pheran]

Does anyone make a real profit on a boat after considering all related costs?

Well, I wasn't asking just out of academic interest.



Thanks for your replies chaps. Having been given pointers by another source, it seems we impoverished boat owners aren't expected to top up the CGT coffers even if we're fortunate enough to make a profit on a sale. However, I thought it might be of interest to others if I posted a couple of extracts obtained from the HMRC website. (my highlights in bold)

Antiques, jewellery and other personal possessions

Most personal possessions worth more than £6,000 are liable to Capital Gains Tax. This applies to individual possessions and collections or sets worth £6,000 as a whole. You must work out the gain if you sell or dispose of them.

Personal possessions liable to Capital Gains Tax (if they’re worth more than £6,000) include:

artwork - such as a painting
collectors' items - such as a chess set
antiques - such as furniture or jewellery

However, there may be no tax to pay if both of the following apply to the possession:

it had an expected useful life of less than 50 years when you got it
it hasn’t been used in your trade or job

An example of this might be a caravan or motor-boat you bought and used for pleasure.

and

Wasting assets (assets of a limited lifespan)

An asset is a 'wasting asset' if its useful life when you bought or acquired it could be predicted to be 50 years or less, taking into account why you acquired it.

All machinery is automatically treated as having a life of 50 years or less. So any machinery is classed as a wasting asset, an antique clock for example.

Personal possessions that are wasting assets are exempt from Capital Gains Tax - unless you can claim ‘capital allowances’ for them.

Chris d - nothing to do with the current boat but one of its predecessors, the sale of which involved a few complications. But since I can show I wasn't involved in 'trade' and it was a wasting asset, it seems fairly certain I will not be sent to The Tower