Selling Cars From Home as a Hobby
Discussion
Hi,
There may be one or two threads already on this, but the search facility is down and I haven't come accross one relevant to me. If there is, then sorry!
Basically I have come to the point where I have realised that in order to save up enough deposit to get my own place (my half of 25%), I need to be earning a little bit of money on the side to my 9-5. One thing that I enjoy and have become quite good at is selling cars for more than I buy them for, this has happened with the last 5 cars that I've had.
Anyone have any advice with regard to the feasablility of making a modest sum on the side? Im not planning this as a "get rich quick" scheme, but an extra for thousand a year to put into savings would help me out:
1. Do I need to do anything with regards registering as a trader? I get bored of my cars very quickly anyway and go through 2 or 3 a year. All I would be doing is adding another 3 or 4 cars on top. I would aim for 6 cars a year, somewhere between £1-£4k margin on each depending on initial value, as opposed to bulk buying. I have an interest free loan left over from previous car sale for the next 16 months so cash is available to put down.
2. I have previously used no-reserve Ebay auctions as my source, and will only buy rare and interesting cars that I am passionate about such as 80's hatches, Lotus Elise's in February to sell in May, maybe the odd 911 and Alfa's. Any thoughts whether this is sound?
3. Leading on from question 1, whatever car I buy will be my only car and will be used as such, so in my mind I see no issue with Insurance being for personal use only and the cars being sold as a private sale, please correct me if im wrong.
Thats all for now, any input good or bad would be appreciated.
Cheers,
Iain
There may be one or two threads already on this, but the search facility is down and I haven't come accross one relevant to me. If there is, then sorry!
Basically I have come to the point where I have realised that in order to save up enough deposit to get my own place (my half of 25%), I need to be earning a little bit of money on the side to my 9-5. One thing that I enjoy and have become quite good at is selling cars for more than I buy them for, this has happened with the last 5 cars that I've had.
Anyone have any advice with regard to the feasablility of making a modest sum on the side? Im not planning this as a "get rich quick" scheme, but an extra for thousand a year to put into savings would help me out:
1. Do I need to do anything with regards registering as a trader? I get bored of my cars very quickly anyway and go through 2 or 3 a year. All I would be doing is adding another 3 or 4 cars on top. I would aim for 6 cars a year, somewhere between £1-£4k margin on each depending on initial value, as opposed to bulk buying. I have an interest free loan left over from previous car sale for the next 16 months so cash is available to put down.
2. I have previously used no-reserve Ebay auctions as my source, and will only buy rare and interesting cars that I am passionate about such as 80's hatches, Lotus Elise's in February to sell in May, maybe the odd 911 and Alfa's. Any thoughts whether this is sound?
3. Leading on from question 1, whatever car I buy will be my only car and will be used as such, so in my mind I see no issue with Insurance being for personal use only and the cars being sold as a private sale, please correct me if im wrong.
Thats all for now, any input good or bad would be appreciated.
Cheers,
Iain
Try using Google as your PH search engine. It works better than the PH Search Engine did (when the PH Search Engine was working).
This topic has been raised quite a few times.
If you are going to trade from home you need to do a number of things -
Notify HMRC that you have set up a business and the date you started trading.
Apply to HMRC to be exempted from paying Class 2 NI if your trading profits are below £5.715 per annum.
Possibly apply for planning permission and a trading licence from your Local Authority.
Sort out trader's insurance
Start completeing Self Assessment tax returns so you can return your trading income and profits to HMRC so that you can pay the correct Income Tax on your trading activities.
This topic has been raised quite a few times.
If you are going to trade from home you need to do a number of things -
Notify HMRC that you have set up a business and the date you started trading.
Apply to HMRC to be exempted from paying Class 2 NI if your trading profits are below £5.715 per annum.
Possibly apply for planning permission and a trading licence from your Local Authority.
Sort out trader's insurance
Start completeing Self Assessment tax returns so you can return your trading income and profits to HMRC so that you can pay the correct Income Tax on your trading activities.
Edited by Eric Mc on Tuesday 21st September 14:08
Cheers for the advice re search feature and technical details
Am i really a trader though if im only selling up to 6 of my personal cars per year? Granted im hoping to make some money out of it and there is a business plan (as there always should be when buying any car), but am I just down as someone who likes to change from one rare and interesting car to another on a regular basis?
I wont be buying 10x clapped out fiestas for £1k each and selling them on for £1200
Am i really a trader though if im only selling up to 6 of my personal cars per year? Granted im hoping to make some money out of it and there is a business plan (as there always should be when buying any car), but am I just down as someone who likes to change from one rare and interesting car to another on a regular basis?
I wont be buying 10x clapped out fiestas for £1k each and selling them on for £1200
iain014 said:
Cheers for the advice re search feature and technical details
Am i really a trader though if im only selling up to 6 of my personal cars per year? Granted im hoping to make some money out of it and there is a business plan (as there always should be when buying any car), but am I just down as someone who likes to change from one rare and interesting car to another on a regular basis?
I wont be buying 10x clapped out fiestas for £1k each and selling them on for £1200
If you set up to sell things and make a profit at the same time, then you are trading, end of story. Am i really a trader though if im only selling up to 6 of my personal cars per year? Granted im hoping to make some money out of it and there is a business plan (as there always should be when buying any car), but am I just down as someone who likes to change from one rare and interesting car to another on a regular basis?
I wont be buying 10x clapped out fiestas for £1k each and selling them on for £1200
Whether you consider it a part time activity, hobby etc is totally irrelevant. Once you buy and sell things with a view to making a profit, you fall completely into HMRC's definition of "trading on one's own account" and will be subject to Income Tax on those profits.
Eric Mc said:
iain014 said:
Cheers for the advice re search feature and technical details
Am i really a trader though if im only selling up to 6 of my personal cars per year? Granted im hoping to make some money out of it and there is a business plan (as there always should be when buying any car), but am I just down as someone who likes to change from one rare and interesting car to another on a regular basis?
I wont be buying 10x clapped out fiestas for £1k each and selling them on for £1200
If you set up to sell things and make a profit at the same time, then you are trading, end of story. Am i really a trader though if im only selling up to 6 of my personal cars per year? Granted im hoping to make some money out of it and there is a business plan (as there always should be when buying any car), but am I just down as someone who likes to change from one rare and interesting car to another on a regular basis?
I wont be buying 10x clapped out fiestas for £1k each and selling them on for £1200
Whether you consider it a part time activity, hobby etc is totally irrelevant. Once you buy and sell things with a view to making a profit, you fall completely into HMRC's definition of "trading on one's own account" and will be subject to Income Tax on those profits.
Ive got up to £20k to invest in something to try and eek out another £20k plus savings in the next 3 years to get a good deposit together. Not sure that shares is the safe bet at the moment so back to the drawing board!
Oh FFS sake, I couldn't believe the responses above to the OP's note, then I checked what section it was in, and all becamce clear.
OP, so long as you're just buying and selling the cars for your personal use, and not filling your front drive witih a plethora of old bangers, who is gonna care.
So what if you buy and sell a car every month, it's up to you how long you keep a car.
Just go for it.
OP, so long as you're just buying and selling the cars for your personal use, and not filling your front drive witih a plethora of old bangers, who is gonna care.
So what if you buy and sell a car every month, it's up to you how long you keep a car.
Just go for it.
Piersman2 said:
Oh FFS sake, I couldn't believe the responses above to the OP's note, then I checked what section it was in, and all becamce clear.
OP, so long as you're just buying and selling the cars for your personal use, and not filling your front drive witih a plethora of old bangers, who is gonna care.
So what if you buy and sell a car every month, it's up to you how long you keep a car.
Just go for it.
Do you think that an HMRC official will believe someone that they bought and sold up to 12 cars a year PURELY for their own personal useage?OP, so long as you're just buying and selling the cars for your personal use, and not filling your front drive witih a plethora of old bangers, who is gonna care.
So what if you buy and sell a car every month, it's up to you how long you keep a car.
Just go for it.
Do you think that the neighbours will be happy to see cars coming and going frequently from a house near to them?
Do you think that they would be happy to see cars on the street or parked in a nearby drive showing "For Sale" signs on a continuous basis?
These are serious issues and genuinely cause problems in the real world.
The OP asked the question on the basis that he was operating a business. He even went to the trouble of letting us know that he had prepared a "business plan" and posted his query in the "Business" forum. I think it is only right and proper that those who know the legalities of what's involved should give hin an idea of the "business" and taxation consequences relating to his "business" query.
Edited by Eric Mc on Tuesday 21st September 16:23
They've got to catch you first 
This sort of activity goes under the radar constantly.
Would it not fall into a similar area as second properties bought, renervated then sold at a profit atract tax, yet your sole property and residence, renervated, then sold at a profit, does not.
Surely, if it his own daily transport which he improves, sells at a profit, then buys his next daily drive and does the same, it wouldn't attract any tax implications nor would he be expected to register as a business?
Im no accountant but it would seem wrong to get taxed on the above basis.
This sort of activity goes under the radar constantly. Would it not fall into a similar area as second properties bought, renervated then sold at a profit atract tax, yet your sole property and residence, renervated, then sold at a profit, does not.
Surely, if it his own daily transport which he improves, sells at a profit, then buys his next daily drive and does the same, it wouldn't attract any tax implications nor would he be expected to register as a business?
Im no accountant but it would seem wrong to get taxed on the above basis.
Piersman2 said:
Oh FFS sake, I couldn't believe the responses above to the OP's note, then I checked what section it was in, and all becamce clear.
OP, so long as you're just buying and selling the cars for your personal use, and not filling your front drive witih a plethora of old bangers, who is gonna care.
So what if you buy and sell a car every month, it's up to you how long you keep a car.
Just go for it.
Terrible adviceOP, so long as you're just buying and selling the cars for your personal use, and not filling your front drive witih a plethora of old bangers, who is gonna care.
So what if you buy and sell a car every month, it's up to you how long you keep a car.
Just go for it.
Just what my friend said, and kept saying, until the tax man took £268'000 off him eventually.
Selling motor cars is not a business to do from home underneath the radar, too many pissed off customers will make sure the HMRC know what you are doing.
3200gt said:
They've got to catch you first This sort of activity goes under the radar constantly.
Would it not fall into a similar area as second properties bought, renervated then sold at a profit atract tax, yet your sole property and residence, renervated, then sold at a profit, does not.
Surely, if it his own daily transport which he improves, sells at a profit, then buys his next daily drive and does the same, it wouldn't attract any tax implications nor would he be expected to register as a business?
Im no accountant but it would seem wrong to get taxed on the above basis.
It's obvious that you are no accountant - if you don't mind me saying so. This sort of activity goes under the radar constantly. Would it not fall into a similar area as second properties bought, renervated then sold at a profit atract tax, yet your sole property and residence, renervated, then sold at a profit, does not.
Surely, if it his own daily transport which he improves, sells at a profit, then buys his next daily drive and does the same, it wouldn't attract any tax implications nor would he be expected to register as a business?
Im no accountant but it would seem wrong to get taxed on the above basis.
Second properties DO attract tax - if they are sold for a profit. That tax is called Capital Gains Tax and has its own set of unique (and complex) rules quite different to Income Tax.
Main residences are legally exempted from Capital Gains Tax if sold on at a profit.
If a builder builds houses as part of his trading activity (i.e. a property developer), then the profits from the sale of THOSE houses are TRADING profits (not Capital Gains) and will be taxed under the normal Income Tax rules, if trading as a sole-trader or Corporation Tax rules if the trade is being carried on through a limited company).
3200gt said:
You might want to read my post again. I siad second properties do attract tax and that main residences don't. My question was, why would the same (or similar) rules not apply to cars?
Because they do.You will not be taxed on the sale of your own personal car if that sale generates a profit (it hardly ever does, though, does it).
However, proving that buying a sequence of cars in quick sucession or buying groups of cars and retaining them in stock with a view to sale might indicate that the cars aren't REALLY your personal cars and that you had bought them with every intention of selling them on fairly quickly for profit.
HMRC are not stupid. They can spot the difference between a genuine sale of a personal car and someone who is trying to run a a "hidden" business.
HMRC are actively monitoring autotrader and ebay (and I wouldn't be surprised if PH too) for patterns emerging, the same mobile number being used many times etc, do you want the ever present worry of them turning up unannounced and doing a full investigation?
As Eric says one disillusioned punter and they will ring HMRC, look how many times that is suggested as a recourse on the other PH forums. Now you may think you won't have any unhappy punters but buyers are strange, particularly when large sums of money are involved, you will get someone wanting to enforce their SOGA rights, then thinking they'll give HMRC a quick heads up too just for added merriment.
As Eric says one disillusioned punter and they will ring HMRC, look how many times that is suggested as a recourse on the other PH forums. Now you may think you won't have any unhappy punters but buyers are strange, particularly when large sums of money are involved, you will get someone wanting to enforce their SOGA rights, then thinking they'll give HMRC a quick heads up too just for added merriment.
Its OK Mr Eric, there no need for you to oppologise for your previous misreading of my post and your admonishment of me for it. Maybe I should have put it in columns of figures for you to understand more cleary. (light hearted, tongue in cheek jibe).
The original post said that he would only ever have one car, his own personal transport, albeit changed fairly frequently. Does he really need to declare IF he makes a profit from his personal peculiarities regarding transportation. It wouldn't even cross my mind to mention it to the tax man (or my accountant) on my tax returns (thats assuming that he intends what his original post stated.).
The original post said that he would only ever have one car, his own personal transport, albeit changed fairly frequently. Does he really need to declare IF he makes a profit from his personal peculiarities regarding transportation. It wouldn't even cross my mind to mention it to the tax man (or my accountant) on my tax returns (thats assuming that he intends what his original post stated.).
3200gt said:
Its OK Mr Eric, there no need for you to oppologise for your previous misreading of my post and your admonishment of me for it. Maybe I should have put it in columns of figures for you to understand more cleary. (light hearted, tongue in cheek jibe).
The original post said that he would only ever have one car, his own personal transport, albeit changed fairly frequently. Does he really need to declare IF he makes a profit from his personal peculiarities regarding transportation. It wouldn't even cross my mind to mention it to the tax man (or my accountant) on my tax returns (thats assuming that he intends what his original post stated.).
His original post was asking about running a business - so I replied on that basis.The original post said that he would only ever have one car, his own personal transport, albeit changed fairly frequently. Does he really need to declare IF he makes a profit from his personal peculiarities regarding transportation. It wouldn't even cross my mind to mention it to the tax man (or my accountant) on my tax returns (thats assuming that he intends what his original post stated.).
IF he was able to own one car at a time and IF he was able to sell each car and acquire a replacement in immediate succession he MIGHT be able to show that he was only buying and selling his own personal cars.
In reality, of course, that is not the way it would work out. There would be times when he would probably have to have two or three (or more) cars "In Stock" at any one time.
Like a lot of things to do with tax, the law is fairly clear. It's the the way in which people chose to interpret or avoid the law that causes them problems.
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