According to reports, within the next few weeks those purchasing classic vehicles from abroad could be forced to pay up to 30% more to import historic vehicles. This is in conjunction with the Brexit transition period, where tax is expected to rise in multiple sectors. At the end of last month, Colin Laidlaw, the Director of VAT at Kreston Reeves advised that imported classics are set to become "even more expensive" after the new few weeks. Read the full article below and find out how the classic industry might have to start looking closer to home in the near future:
Whilst the news suggests this will simply be putting costs in line with other countries, there's no doubting that Brexit may have a sudden and costly impact on those choosing to buy outside of the UK. Laidlaw continued to add that, "The cost of buying and importing a classic car or motorcycle from continental Europe is set to become even more expensive", warning that the "Bargain classic for sale in Europe may come with a new 20% VAT and 10% duty charge". So, what does this mean for the industry here in the UK? Potentially disruption to supply chains warns experts, leading to longer waiting times for imports. As well as the possibility of extra paperwork when purchasing an initially cheap-sounding vehicle.
It's not all doom and gloom though! The Director of VAT went on to say that some models may be exempt from this added tax if they are considered of "Historical interest". Suggesting that if the car you're looking to import is considered, rare, from a successful sporting background or being purchased with the intention of being added to a collection then you might just avoid the extra charges. Laidlaw went on to confirm this, concluding that "Vehicles that HMRC consider to be of historical interest may qualify for a reduced rate of VAT of just five percent and a nil-rate duty but comes with tough criteria to meet".
The criteria for exemption are loosely defined at this stage as:
- A vehicle that is over 30 years old
- Be in its original state
- No longer be in production
- Most importantly, have what HMRC calls the ‘requisite characteristics for inclusion in a collection’*.
- Vehicles that are involved in motor racing, built for competition and having achieved sporting success
*HMRC defines this as meaning being relatively rare and used outside of its normal purpose.
Whilst it's felt that it would be considered unlikely that an "Everyday classic bought and imported into the UK from Europe or elsewhere would qualify.", it's been confirmed that the added tax will only be applicable to those models which are to be imported to the UK and not those that are already in the country. Experts believe that this new rise might well see collectors flocking to buy British-based cars and manufacturers in an attempt to save costs. But, on a positive note the effect of Brexit will not impact the car prices themselves moving forward and should, "Remain stable" throughout the process. Even though this has the potential to impact businesses who rely on importing vehicles into the country, it's only fair to mention that this sudden announcement will only come to fruition, should the UK Government fail to reach a deal by the 31st December.
Classic Trade will be updating on this news, should there be any relevant announcements moving forward.