Volvo S40 - Selling my car - how does income tax work on it?

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Fri 6 Apr 2018 16:19
Volvo S40 - Selling my car - how does income tax work on it? - Thinowns

Hi!

I'm looking to sell my old car, a 2008 Volvo S40 Sport for about £4500. I was wondering how tax works on car sales - I will be selling it privately if it matters. Is there any tax I need to worry about or not? The tax calculator says I've got only £3000 until I'm in the higher tax bracket - which is why I'm wondering about this. Is it something I should keep in mind when selling it? Hoping someone here has a better idea than I do, this is the first car I've sold myself!

P.S. Looking at downsizing for my next car. Currently liking the look of the 2016 Ford Focus or Vauxhall Astra and have a budget of about £13,000 - anyone got any pointers to other cars?

Thanks in advance!
George

Edited by Avant on 10/04/2018 at 00:41

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Fri 6 Apr 2018 16:35
Volvo S40 - Selling my car - how does income tax work on it? - Bromptonaut

Not sure if George is serious or trying to advertise a tax caculator or some such thing.

I suspect the latter but in case former is correct then unless you're selling vehicles by way of trade/profession then there's no tax.

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Fri 6 Apr 2018 18:23
Volvo S40 - Selling my car - how does income tax work on it? - skidpan

I'm looking to sell my old car, a 2008 Volvo S40 Sport for about £4500.

The OP does not say which model it is but even the highest value 2008 Sport (the D5 Geartronic) is only worth about £2000 as a private sale even if its in cracking condition. A poverty spec 1.8 Sport is only worth about £1600.

Should the OP be interested income tax is for money earned, the clue is in the name. Tax on the profit from selling cars is for traders to worry about.

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Fri 6 Apr 2018 19:00
Volvo S40 - Selling my car - how does income tax work on it? - Andrew-T

<< Tax on the profit from selling cars is for traders to worry about. >>

Private sellers rarely make any profit from selling a car, unless it's something pretty special or a model that is achieving classic status. Just now the 205 GTi seems to be in that position. I even got twice what I paid for a 205 Garros soft-top 5 years ago, but that wasn't very much.

But I don't make a tax return any more .....

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Fri 6 Apr 2018 22:23
Volvo S40 - Selling my car - how does income tax work on it? - Smileyman

selling assets for profit is a capital gain, I suggest you call HMRC and ask them to send you a tax return form for Capitla Gains Tax

Whilst discussing this, also ask about the annual exemption limit!

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Sat 7 Apr 2018 15:36
Volvo S40 - Selling my car - how does income tax work on it? - skidpan

Whilst discussing this, also ask about the annual exemption limit!

I can tell you its £11700. So if the OP paid nothing for his Volvo S40 Sport and sold it for £4500 he would still be way off paying any tax. And don't forget that an anual index is added to the purchase price (or value at acquitition) so if the item has gained value over several years of ownership there will not be tax to pay on the full "profit"

Its quite a while since I have dealt with CG but the rules appear to remain the same.

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Sat 7 Apr 2018 23:00
Volvo S40 - Selling my car - how does income tax work on it? - jthan

Skidpan, I hope you use an accountant if/when you have capital gains to return...

You are quite right in citing the 2018/19 exemption as £11,700, but your other comments are somewhat off the mark:

First of all, normal motor cars are CGT exempt. This exemption is longstanding and reflects the fact that most non-traders lose money on their cars.

Secondly, indexation ("inflation") allowance was completely abolished at 6/4/98, except for companies. For companies, it continued up to 1/1/18 and is now frozen.

So, regardless of whether the OP has other capital gains in the same year, or not, CGT will be irrelevant on the Volvo sale. But income tax would be payable if trading.

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Mon 9 Apr 2018 17:31
Volvo S40 - Selling my car - how does income tax work on it? - skidpan

Skidpan, I hope you use an accountant if/when you have capital gains to return...

Only had to do it once and that was when I sold some building land back in 1989. Taxman wanted "X" amount and I had calculated I owed "Y". After showing him my figures he agreed, a 50% reduction, paid for the Caterham with a bit to spare. No need for an accountant.

Secondly, indexation ("inflation") allowance was completely abolished at 6/4/98, except for companies. For companies, it continued up to 1/1/18 and is now frozen.

Not aware of that but since I have not need to pay any I have not kept upto date with the rules.

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Mon 9 Apr 2018 23:06
Volvo S40 - Selling my car - how does income tax work on it? - Smileyman

First of all, normal motor cars are CGT exempt. This exemption is longstanding and reflects the fact that most non-traders lose money on their cars.

It was me that brought up the subject of CGT ... I did not know that motor vehicles were exempt but again have never sold a car at a profit ... but for most other assets the comment is sound ..

unlike the OP's which do look as if they are advertising a linked product, but I won't click the link in case it has an unwelcome additional download in tow ....

Edited by Smileyman on 09/04/2018 at 23:10

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Tue 10 Apr 2018 00:41
Volvo S40 - Selling my car - how does income tax work on it? - Avant

I've taken out the link just in case it's unsafe. I wouldn't have thought it was an advert: it seems almost inconceivable that someone could advertise a tax calculator and not know that if you exchange one asset for another (car for cash) there is no income to be taxed on.

Edited by Avant on 10/04/2018 at 00:46

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