Passing my boat down to my son

[lw395]

Yachts can be subject to CGT here. Exempt Wasting Assets are those with a predicted life of less than 50 years - plenty of boats around that are older than that. So if this is the disposal of a personal chattel worth over £6000 then it should be declared if the sale proceeds are more than the original cost. https://www.gov.uk/government/publi...eet/hs293-chattels-and-capital-gains-tax-2015

Unless it's changed in the last few years, a yacht, if it has an auxiliary engine, is always a wasting asset.
I became well aware of this at first hand, when trying to offset the loss on a yacht against a business gain for CGT.
From your link " Certain chattels are always treated as wasting assets, for example, plant or machinery."

Yes I was tempted to whip the engine out!

 

[MoodySabre]

Unless it's changed in the last few years, a yacht, if it has an auxiliary engine, is always a wasting asset.
I became well aware of this at first hand, when trying to offset the loss on a yacht against a business gain for CGT.
From your link " Certain chattels are always treated as wasting assets, for example, plant or machinery."

Yes I was tempted to whip the engine out!

I could see it in the guidance but good. Not that I will ever make a profit on a boat!

 

[Tranona]

Thanks for all your help, as it has been within the family since new there is no previous bills of sale, and therefore there is no document that I know of that states the owner of the boat. So this bill of sale is the first proof of ownership the 30 year old boat has! Do you think that may pose a problem in the future?I just want to hand over some paperwork that can be kept in the draw (that may never be seen again) but is there just in case of any disputes in the future.

Again I really appreciate all of the great advice.

Originally there would have been an invoice from the builder and possibly what is known as a Builders Certificate which is the transfer of title from the builder to the first owner. In the past there were a lot of reasons why this paperwork was sloppy or subsequently discarded. However, the explosion of boat usage has resulted in much more attention being paid to documentation and title, not least because of the value of such assets and the mobile nature - for example taking boats abroad. As there is no form of compulsory registration or identity of boats in the UK, the Bill of Sale is the only acceptable document of title. Our Part 1 register is only a register of title and the actual title is with the BofS.

So makes sense to start a proper paperwork trail now with this change of ownership. Whatever others might say, its existence or not will have no effect on tax, except that once the transfer of ownership has taken place it will fall out of your estate after 7 years. If you retain ownership (with or without a BofS) and leave it to your son in your will, it will be part of your estate and subject to inheritance tax should you be rich enough to be caught in the net! So tax is not the reason for doing it but it will make life easier for your son when he comes to sell, or wants to take the boat abroad and is asked to prove ownership. A no cost exercise, so can't see any downside.

 

[ParaHandy]

These seemingly innocent questions can hide a truly horrific secret like no vat being paid on a fiddled purchase.

Just get the rya bill of sale, get a broker's estimate of value and remember that in the UK you could be charged for sole use of the boat after sale to your son.

 

[JumbleDuck]

Tax issues aside, social services can be VERY persistent in investigating disposal of assets if paying for care becomes an issue. I think it's for the same 7 years as inheritance tax.

 

[Tranona]

These seemingly innocent questions can hide a truly horrific secret like no vat being paid on a fiddled purchase.

Just get the rya bill of sale, get a broker's estimate of value and remember that in the UK you could be charged for sole use of the boat after sale to your son.

Cannot see how VAT and "fiddled purchases" are relevant. There is no VAT involved in the sale or transfer of ownership of a private boat. Why do you need any value? You are talking about "gifts with reservation" - highly unlikely in this case as the OP intends giving the boat to his son and no talk of him continuing to use it. That will only be relevant if he was giving it away to avoid inheritance tax, and this aspect has already been covered earlier.

The OP has asked a simple question and (ignoring the unlikely inheritance tax issue which he did not ask about) there is a simple answer. Nothing "horrific" at all.

 

[ParaHandy]

There is no VAT involved in the sale or transfer of ownership of a private boat. Why do you need any value? You are talking about "gifts with reservation" - highly unlikely in this case as the OP intends giving the boat to his son and no talk of him continuing to use it. .

I've always found an original valid vat invoice essential

 

[Sybarite]

Seems possible the Op is not subject to UK tax regime, going on his username?
Some countries, yachts can be subject to CGT.

In France you may gift sums up to a certain amount to your children. Above that, they become taxable. (income tax)

 

[JumbleDuck]

I've always found an original valid vat invoice essential

For what purpose?

 

[Tranona]

I've always found an original valid vat invoice essential

Why? the boat is over 30 years old so would be deemed VAT paid (if it has always been in the EU). The OP purchased it new. No chance of VAT not being paid, nor any need to have a copy of the invoice.

 

[ParaHandy]

Why? the boat is over 30 years old so would be deemed VAT paid (if it has always been in the EU). The OP purchased it new. No chance of VAT not being paid, nor any need to have a copy of the invoice.

"No chance", "No need" laughable!

 

[JumbleDuck]

"No chance", "No need" laughable!

Could you perhaps let us know for what purposes you have "always found a valid, original VAT invoice essential"? I have one for the boat in which I am sitting, but in five years nobody has shown the slightest interest in seeing it.

 

[Tranona]

"No chance", "No need" laughable!

Explain then how a private person can buy a boat from a VAT registered trader without paying VAT. Also explain when there is a need to show a VAT invoice for a 30+ year old boat. There is no legal requirement to retain a VAT invoice - do you have an invoice for the TV you bought 30 years ago?

While there may well be situations where not having a VAT invoice for a boat may cause problems, but the situation as described by the OP is not one of them.

Always good to avoid categoric statements. Better to comment in the context of the question.

 

[lw395]

Only time I have been asked for VAT paperwork was re-entering the EU.
And on selling a boat via a broker.

I don't think private person can buy a used boat from a VAT registered business without paying some VAT.
Normally we buy from brokers, not dealers, we are actually buying VAT paid goods from private individuals.
If you buy a boat from a Vat-reg'd business they will charge you VAT.
I would guess it's like cars where AFAIK, they pay VAT on their markup, via a 'margin scheme'?

 

[sgjfrods]

Thanks for all your help, it is very much appreciated. I think I will go down the bill of sale route.

I don't understand all this VAT palarva, it was bought from new from in the u.k westerly yachts Ltd, 30 years ago and has been in the family ever since. I don't see this bring an issue. I may try and dig through some paperwork and try and find the original receipt for the boat and then it will have a complete set of history with it.

I understand about inheritance tax and the rules/regs, I hope it won't ever become an issue.

Thanks again