running your yacht as a business?

[jams]

Has anyone run their yacht as a business? Thinking about getting mine coded over the summer. Wondering how it went if you have been there.

 

[Tranona]

Initial advice is don't do it. There is already an oversupply of boats for charter and commercial use. Depending on the boat coding is a significant expense. However it is not difficult. The difficulty is generating sufficient business to earn money greater than the cost of providing the service.

So get your business plan right - what you are going to sell, to whom and at what price - test out its robustness and the coding issues just become largely a one-off cost.

Some people manage to do it - either by hooking up with a source of customers such as in a management business or because they have the personal skills and contacts for attracting business. Most probably give up after a couple of years failing to attract enough business to cover their costs.

 

[srm]

Ran a yacht as a skippered charter business in the 80's. Lot simpler with no codes of practice etc then but agree totally with Tranona above.
If skippering you have to run to a timetable, difficult with a sailing boat and can be stressful. If bare boat and its also your pride and joy (as opposed to a straight business asset) how will you feel having someone you don't know heading off with it over the horizon?

 

[William_H]

Boats as a business

Around here and I imagine in UK the market is full of people hoping to recoup money spent on their boat as charter business. A man might build or buy a boat that is too big and he can't afford to keep it as a pleasure craft. Using it as a business might seem to be the answer. However you might find that you are up against so many others hoping to turn pleasure to profit.
If you have a personal skill or qualifications that can bring in a decent income then you have something that the average charter skipper does not have. So stick with it. Just spend money outwards on boat. So much easier.
It is not that hard to get skipper's certificates but it does take time. Coding of the vessel likewise can be done with patience and money. Getting cash customers now there is a problem. Obviously some succeed. good luck olewill

 

[Deleted member 36384]

If you have a modern, well maintained yacht, then if it is placed with a reputable yacht charter company you may recoup your running costs with a small mark up.

If its an older yacht that requires any type of TLC then it will probably run at a loss. If you want to do it all yourself the cost of advertising is likely to be prohibitive unless you have a ready market i.e. a social worker with a yacht who offers team building sails to Community Services (it happens).

Take a look at charter company brochures for the size of yacht being chartered. Its now common that the smallest size is 40' usually with a high berth count. There is a reason for that. Most chartering will be large groups spreading the cost of the hire and they want a bit of space for their dosh bags.

On the Firth Of Clyde companies like Sunsail with 15 boats pulled out because the market was saturated. It still is.

In summary: large boat, well maintained, low maintenance, on managed charter or specialist market. Some of the specialist market boats, big pilot cutters, gaff rigged, ex ocean racers are owned by business's or wealthy individuals who can afford to patronise the enterprise.

Tarona's business plan is key - do the sums, dont assume any costs. get the facts around pricing. I think you will find that the simple arithmetic will show a small margin after you deduct all reasonable costs.

 

[Talulah]

Has anyone run their yacht as a business? Thinking about getting mine coded over the summer. Wondering how it went if you have been there.

As someone who runs a boat as a business I can say from experience that I wouldn't do it again. It is simply not worth it in every respect. It is a continual drain on resources, time and money and in the long run you'll make huge losses in terms of depreciation.

 

[Neil_Y]

I coded mine in 2003 in case we decided to run day charters or bare boat at some point, in the end it wasn't viable as a business or support for running costs.

However the coding work was a good way to look at the boat in detail in terms of safety and equipment so the changes made were all useful.

 

[davidej]

I wonder if the over-supply of coded yachts is that any losses can be offset against other income. Thus a high tax payer can effectively run the yacht out of pre-tax income rather than post-tax?

Any Comments?

 

[Tranona]

I wonder if the over-supply of coded yachts is that any losses can be offset against other income. Thus a high tax payer can effectively run the yacht out of pre-tax income rather than post-tax?

Any Comments?

No, in general that is not the case in the typical situation where the boat is both a private and business asset. Any private use attracts a benefit in kind tax assessment. If it was easy everybody would be doing it - but convincing HMRC that running a private boat as a business is not easy.

BTW Coding on its own is not a big barrier for a well equipped yacht, although quite a lot of money initially for a new basic production boat. As others have noted, the big barrier is finding enough paying customers!

 

[Beadle]

I did this some years ago - just before the compulsory coding came in. I never made a true profit but it covered the costs of running the boat which helped.

I had one customer who went out in weather he could not cope with and did a fair bit of damage. Not satisfied with that he took me to small claims court because I witheld his deposit. Not satisfied with losing there he appealed to county court and got another *******ing from the judge. Not a great financial loss to me but the time and stress was enough to put me off and I packed in after that.

You get to meet some interesting characters though - and the occasional loony.

 

[Sailfree]

I wonder if the over-supply of coded yachts is that any losses can be offset against other income. Thus a high tax payer can effectively run the yacht out of pre-tax income rather than post-tax?

Any Comments?

I run my yacht as a business and frankly I would not do it again. My initial boat was with a sailing school and even when not out sailing it was used as a dormatory for shore based courses. The wear was horrendous.

I tried to move it to a quality operation Hamble Point Yacht Charters but they would not accept it! At the SIB, after 911, the distributors was desperate to sell a new display boat and took my old one as part ex. so I upgraded and put it with Hamble point Yacht Charters.

Hamble Point Yacht Charters really look after the boat and it is always well presented but only at a high maintenace cost to keep it in good condition and then came the kicker!

HMRC investigated lots of boat owners on their tax returns going back years. When with a sailing school the charter is a service so you can claim depreciation as part of the loss but as a bare boat charter you can only claim any losses and depreciation cannot be include in the loss as its treated as an asset for hire not a service.

If you make a loss - at some stage HMRC will insist its a hobby not a business and disallow all losses.

A few manage it on the basis of team building or individual tuition but with the increase in Tax Investigations you must make your own judgement whether the HMRC will shine their searchlight on you.

I did everything legal and followed the accountants advice and even took out insurance against Tax Investigation but that only kicks in for a full investigation not a "limited enquiry".

My tax investigation cost me £10k. I have a boat for the corporate market and make the best of it but frankly had the Tax Investigation occurred before I bought the boat I would never have bought it.

The French try to encourage businesses and treat them favourably. A few years ago during a recession they offered huge incentives to buy a boat and put it out to charter in the Carribean but in England the attitude is if you can buy a boat you cannot be paying enough Tax so we obviously must need to look more closely at you! Trying to run it as a business is advertising the fact of boatownership to HMRC and is likely to get you investigated sooner rather than later.

I have done it for 12 years and only the optimistic & inexperience buy a new boat now to put out to charter and it is noticeable that UK charter fleets are getting older.

IMHO the UK charter market will be a declining industry with older boats and chartering abroad will increase. I would definately look at a business plan for say Greece or Croatia or in fact anywhere except the UK.

Good old UK tax everthing until it is no longer viable.

 

[jams]

Thanks for the input. I thought that might be the case.

 

[yacht surveyor]

If you do charter your boat, figure in a lot of damage in ways you never thought would be possible.

For example, one of our charters came back with the backstay on so tight that all three foresail halyards wrapped themselves around the forestay and caused it to unwind - new forestay required. Only one of about 5 incidents that year!

Unfortunately more business often means more cost - no matter how carefully you select your clients.