Using boat for chartering / teaching - does it make sense?

[MidlandsOnSea]

I'm thinking about getting our Sealine S34 up to Code of Practice standards and then making it available to a sea school for teaching and/or for skippered charter. Objective is to try to recoup some of the running costs while the boat isn't being used. The boat is based in Brixham.

Aside from the obvious stuff (like not having the ability to use the boat whenever you want to), I'm wondering if any of you know about the reality of the financial benefits. The boat is reasonably well equipped already but there will be costs involved in getting it coded for commercial use, plus insurance, increased maintenance costs etc. By the time you incur all those expenses, is it still financially worthwhile? Anyone have any idea of how oten the boat needs to be hired out to reach some kind of break-even point? Assume I'm somneone who wants the boat maintained in good condition - when the family are on board, we won't want to feel like we're in an old tub.

I thought about getting a co-owner, which worked well for us when we had a sailing yacht, but sharing mobos doesn't seem to be very popular, and I'm a bit fussy about who I'd share with.

 

[tcm]

um, well obviously it depends how much it costs to get mca coding, and how they'll pay to use yer boat.

Unles you get a big big boat in med, chartering only really offsets the cost of the boat you wd have bought anyway - you don't really "make money".

I wd guess that the good aspects of lending to a boating instructor is that it doesn't get a ton of misuse - it's an instructor innit, who will know what's what. You will also have this faily together person keeping an eye on the boat - more chance of catching things befoere they go wrong. Finally, quite a lot of courses run during the week and/or off-season leavbuing weekends and august for you so not bad.

 

[Medskipper]

If like me you are fussy about your boat, then I would say don't do it! people never look after things that they hire and your boat will be no exception to this rule! Apart from this, our boat is our second home, with lots of personal things on board so that we don't have to bring loads of stuff to the boat all the time! if your boat is also like this, would you really want people messing around with your things all the time?

Unless you cannot afford to run the vessel and the only way for you to stay boating is to do this, I would say don't do it!

Barry

 

[Deleted User YDKXO]

I've looked into this myself and even done some light charter work in the Med. Firstly, you will have to get the boat coded which will cost for the S34 I guess in the region of £7 - 9k. Second you will have to inform your insurance company and they will up the premium maybe 50%
There is no way that chartering your boat is a profitable business unless you're willing to charter for 10-15 weeks a year in which case you will not be able to use the boat yourself very much and you will have to factor in higher maintenance and depreciation costs. IMHO, chartering is only a way to offset some of your running costs.
In the Med, chartering is mostly weekly skippered or bareboat chartering for holidays. Personally, I would'nt let my boat go out without a skipper on board but then he has to have somewhere to sleep ie a crew cabin. You need to pick your skipper carefully. In the UK, I believe the charter market is mostly skippered day charter for corporate jollies and events like Cowes week. I'm guessing you could get £500-750 a day for the S34 and no guests would be sleeping on board. As a sea school boat, you might have an experienced skipper on board but most of the time you've got inexperienced dorks at the controls and they're sleeping on board. I think that the charter company itself has a big effect on what condition your boat is kept in. Some care a lot and others dont give a s**t so its worthwile looking at some of their boats and talking to some of their owners
There is one other aspect to chartering which may be of interest. It is perfectly viable to set up a VAT registered limited company to own and operate a charter boat. You can claim back the VAT on the purchase of the boat and the running expenses. The company will not make a profit anyway but you will be able to claim a capital allowance for the boat just like any other piece of business equipment which will ensure that the charter company will make a large loss. If you already own a profitable limited company you could set up the charter company as a subsidiary of your main business and set off the loss from the charter company against the profits of your main business to reduce your tax bill. There is obviously the issue of benefits in kind for personal use of the boat but a good accountant will be able to negotiate a fair arrangement with the Revenue and Customs. There are several dealers/charter companies which will offer to set up this kind of arrangement as a means of selling you a new boat
I think light chartering is worth considering if you are not using your boat much yourself. Say, for example, you were only using your boat 50hrs per year, then another 50 hrs of charter would'nt do much harm if it was done properly through a reputable charter company. In fact it would do the boat good to be run more regularly. On the other hand, if you are already putting 150hrs per year on your boat, then chartering might impinge on your own ability to use the boat and put excess hours on the engines which wont help when you want to sell the boat on

 

[jfm]

....but you cannot get the hull VAT back if you have already bort the boat privately. You wud have to buy a new boat or an exVAT boat in order to be able to reclaim the VAT

If you are reasonably competent on diy I wd think you could code a s34 for about £5k

 

[PaulGlatzel]

Thought that I’d post a few thoughts on this as have some experience of the questions you are facing. In no particular order:

- Certainly the £600/700 for Corporate entertainment type charter sounds about right – assuming it includes fuel & skipper. Don’t expect to get anything like that though from a training school as they will expect (& do) pay £200 – 250 plus fuel per day for a similar boat. Equally you may find there are actually few schools interested as 1) there are actually not that many MC schools 2) They may have arrangements where they get to use coded craft for very little but in return maintain them/or perhaps manage them for charter etc. Can I suggest perhaps speaking to David Hickman at Torbay & Dartmouth Powerboat school as he operates from Brixham and will give you a clearer idea on the possibilities there (www.powerboat-instruction.co.uk)

- If you do decide to charter do fully expect the boat to suffer higher wear & tear. With a higher proportion of inexperienced boaters on your craft I find they tend to grab things & stand on things not designed for it with predictable consequences. As long as you expect this you’ll be fine and whether it is much of an issue will largely be a function of the skipper you have and how much you are earning from chartering.

- Re the VAT man. The VAT man will want to cut a deal with you re the VAT (rest assured they are extremely wise to this area) and seems happy with deals ranging from letting you claim the whole amount and then chartering the vessel when you need it (at a commercial rate) versus claiming a % of the VAT according to personal Vs business use. Predictably expect then to have to prove it. In part the treatment & approach of the VAT office might vary according to location as I imagine landlocked VAT offices have somewhat less experience of this than my switched on Poole office. Ultimately though the treatment seems fair and reflects how you intend using the craft.

- As Mike comments much of the more of the training is midweek (in comparison to the powerboat courses) so perhaps you would be able to cut a deal where it was used for training midweek but not weekends

Hope that this is of use

Paul

 

[Deleted User YDKXO]

Good info. From what I hear, C & E will cut a deal at about 80-85% of the total VAT reclaim on the purchase price but that still gives a sizeable and welcome rebate. You still have to deal with the Revenue on the benefits in kind issue. I've also heard that this can be calculated in the following way. You used the boat for personal use, say, 50 days last year which means that for the other 315 days it was available for charter. The benefit is calculated on that ratio
One more point. I think the corporate entertainment market is concentrated in the Solent

 

[Melody]

... its an instructor innit ...

Yes, but if its a school then the pupils will be the ones operating the boat quite a lot of the time. Even if they are told the correct things to do there will still be the odd one who doesn't listen and breaks things.

We've found MUCH more wear and tear on our yacht since operating a sailing school as opposed to skippered charter.

 

[tcm]

more wear sounds about right ...

yep, not many courses include seveal hours of sitting about reading or snoozing each day. Or do they? Ooh, is there an RYA certificate for sitting about and snoozing on a boat? And why haven't i got one, i wonder? I must have done thousands of miles whilst sitting about or snoozing (and at least 50% tidal including several night passages)