Tax on boats?

B

boomer

N/A
Joined
10 Oct 2001
Messages
188
Location
Golden Isles, Georgia, US
Visit site
Can anybody advise me please? In the UK, if you sell a boat you own for substantially more than you paid for it, is the sale subject to Capital Gains Tax? If so, are there any offsets for money spent on improvements etc? Thank you.

(ps not asking for myself but for my son who is a British citizen, UK resident and taxpayer)
 
My view, remember free advice is worth what you pay for it....

Boats are wasting assets and thus not subject to CGT. If you bought and sold boats as a business then the profits would be subject to income tax or to corporation tax but only where you this as a trade. For one boat this is unlikely to apply. Of course you have a tax free gain in order that the rest of us can't claim capital losses!!
 
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.

More info here.........http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm#2
 
In the motor trade if you buy/sell more than 6? per year you are classed as trade and must pay tax, I assume it would be the same with boats or any valuable asset.
 
macnorton said:
In the motor trade if you buy/sell more than 6? per year you are classed as trade and must pay tax, I assume it would be the same with boats or any valuable asset.
Click to expand...

I thought it was about intent. If you buy a boat with the sole intention of selling it on at a profit, then you would be liable for income tax on the gain (or corporation tax if done through a company). I can't imagine it's difficult to avoid this charge on a single purchase, just take the boat out for a spin and say you didn't like it.
 
Yup as regards uk boats are totally exempt from cgt and the profit can be taxed as income only if the seller is a trader. The definition of trader, such as it is, is fuzzy at the edges and would require an essay to explain. Unless you say it is relevant let's not go there
 
Many thanks for the feedback guys. Should have said from the outset he is selling the boat as a private individual, not in the course of trade. He's happy to get a definite answer from the Tax Authorities (eventually) but wanted to scout out the ground first just in case he was putting his head into a noose! ;)
 
michaelchapman said:
How on earth did he manage that?
Please let the rest of us in on the secret :p
Click to expand...

I don't think this is a particularly unique situation. Unlikely to happen if you buy new or nearly new or if you fail to take care of it. In sons case, the boat was basically sound but neglected cosmetically and the unenthusiastic owner was very keen to get rid. Son made a ridiculous offer which was accepted!! It's cost a bit of effort to bring back to standard but not a lot of money. Turns out its a bit of a classic and he's accepted an offer that almost doubles his investment. Much as he likes the boat, it would be madness not to sell.
 
boomer said:
Many thanks for the feedback guys. Should have said from the outset he is selling the boat as a private individual, not in the course of trade. He's happy to get a definite answer from the Tax Authorities (eventually) but wanted to scout out the ground first just in case he was putting his head into a noose! ;)
Click to expand...

No need to tell anybody, particularly not HMRC. There is no tax due, so just sell the boat and enjoy the proceeds.
 
Tranona said:
No need to tell anybody, particularly not HMRC. There is no tax due, so just sell the boat and enjoy the proceeds.
Click to expand...

Exactly. Don't bother asking hmrc. The answer is 100% clear that there is no cgt. You don't even put any entries on your tax return regarding this. Even if you were to ask hmrc and they were to say something different they would be wrong :)
 
You must log in or register to reply here.

Share this page

Top