Buying and selling cars?

sassyblue

Not sure if this is on the right board but l will explain.....

We're saving for a newer car - it'll be around £10k but we only have £6k savings at the moment.

I was wondering what the tax implications would be if we bought a newish car at auction and sold it on, l've researched and we could make between £1k and £3k. However we would need to do this more than once to get upto our £10k?

Would we be classed as 'trading' like a garage??

Hubby and l both work and have normal tax codes.

TIA x

CTA_2

sassyblue wrote: »

Not sure if this is on the right board but l will explain.....

We're saving for a newer car - it'll be around £10k but we only have £6k savings at the moment.

I was wondering what the tax implications would be if we bought a newish car at auction and sold it on, l've researched and we could make between £1k and £3k. However we would need to do this more than once to get upto our £10k?

Would we be classed as 'trading' like a garage??

Hubby and l both work and have normal tax codes.

TIA x

This is a very difficult questions. There are many cases which have covered this area and unfortunately the answer is not a simple one. Effectively you will have to review what is known as the "badges of trade" to determine whether or not that transaction is in the nature of a trade.

http://www.hmrc.gov.uk/manuals/bimmanual/BIM20200.htm

Good luck with this. Feel free to ask any questions on things you are unsure of.

ceeforcat

God - 'the badges of trade' - brings back some horrible studying memories.

Personally, I would find it difficult to argue that the op is NOT trading. Clear profit motive, frequency of transactions etc. Are they really doing anything different from the car dealerships who attend those same auctions?

CTA_2

ceeforcat wrote: »

God - 'the badges of trade' - brings back some horrible studying memories.

Personally, I would find it difficult to argue that the op is NOT trading. Clear profit motive, frequency of transactions etc. Are they really doing anything different from the car dealerships who attend those same auctions?

Yes i would say so. Seems clear to me that the OP wishes to "trade" cars for a short period.

Frequency of transactions, profit seeking motive, no income yield, short holding period.

Note to OP - you would only pay tax on the profit and would be able to claim the cost of the vehicles as a cost of sale (being purchase of stock released once sold).

sassyblue

Thanks both of you l thought that would be the case. It would be trading wouldn't it? :cool: I co-run a business at present so l know how to keep the accounts, and l have to do SA so it could be declared there.

Dont think we'll bother though, falling foul of the tax man worries me.

getmore4less

The real problem will be selling the cars on.

Short period, extra owner, private sales will be be suspicios you bought a lemon you want shot off.


Why not just get the best car you can from the auction and run that while saving for the next one, trade up twice over a year(one each) with the right car should get you from your £6k-£10k.

mind you plenty of good cars a round the £6-£8k if you look so you don't need £10k

What are you looking for?