buying a car privately at auction - help
Discussion
I am considering going to a big auction house like BCA or Mannheim, with a view to buying a boring car.
I am semi-powerfully built, with my own company and a stick-on cardboard goatee, but my company is not VAT registered.
Can anyone please explain to me - in simple, straightforward terms - whether I should buy as a private individual or through the company? And in either case, what do 'margin' and 'VAT qualifying' mean?
I have tried to work this out for myself by consulting auction house websites, forum discussions, and wizened old crones gathered around bubbling cauldrons, but I find the whole thing utterly opaque. If they wanted to put you off going, they couldn't do it any better.
I bought a boring car from BCA a few years ago and it seemed a lot easier then.
The car I'd be buying this time would be between £5k and £8k.
Please keep it simple, I'm an old man.
I am semi-powerfully built, with my own company and a stick-on cardboard goatee, but my company is not VAT registered.
Can anyone please explain to me - in simple, straightforward terms - whether I should buy as a private individual or through the company? And in either case, what do 'margin' and 'VAT qualifying' mean?
I have tried to work this out for myself by consulting auction house websites, forum discussions, and wizened old crones gathered around bubbling cauldrons, but I find the whole thing utterly opaque. If they wanted to put you off going, they couldn't do it any better.
I bought a boring car from BCA a few years ago and it seemed a lot easier then.
The car I'd be buying this time would be between £5k and £8k.
Please keep it simple, I'm an old man.
A VAT Qualifying used car is one which has been bought and used exclusively as a business tool with no private use. Main examples would be daily rental cars, lease company cars, or SOME manufacturer/dealer demos.
With a VAT Qualifying car on a used car lot, the VAT will be included in the purchase price on the windscreen. At an auction you will have to pay VAT on the hammer price as well as on any fees.
If you buy privately, you just need to remember to allow another 20% on top for the VAT.
If you buy as a business for business use only with no private use of the car, you can reclaim the VAT but will have to pay VAT when you eventually sell. If there is any private use, you pay the VAT but can't recover it, though you won't have to pay VAT on disposal.
As for whether you are better buying though the business or privately, only you and/or your accountant can answer that. Just bear in mind that if it is your company and the business buys the car and you use it as a company car you will have both the employers and employees NI to pay, as well as BiK tax.
With a VAT Qualifying car on a used car lot, the VAT will be included in the purchase price on the windscreen. At an auction you will have to pay VAT on the hammer price as well as on any fees.
If you buy privately, you just need to remember to allow another 20% on top for the VAT.
If you buy as a business for business use only with no private use of the car, you can reclaim the VAT but will have to pay VAT when you eventually sell. If there is any private use, you pay the VAT but can't recover it, though you won't have to pay VAT on disposal.
As for whether you are better buying though the business or privately, only you and/or your accountant can answer that. Just bear in mind that if it is your company and the business buys the car and you use it as a company car you will have both the employers and employees NI to pay, as well as BiK tax.
GoneAnon said:
At an auction you will have to pay VAT on the hammer price as well as on any fees.
If you buy privately, you just need to remember to allow another 20% on top for the VAT.
Sorry, this is not correct, at auction on a VAT qualifying car the hammer price is inclusive of VAT. If you buy privately, you just need to remember to allow another 20% on top for the VAT.
Correct, 'VAT qualifying' will include 20% vat, the invoice will be broken down to show the vat, which you can reclaim. However as you're not VAT registered this does not seem worth it. Otherwise, all other cars are 'margin' cars, you will pay your buyers' commission and indemnity on top of the hammer price.
Do you hold an account with BCA or Manheim? I stopped using my BCA Silver account card last year, couldn't stomach the fees. Manheim are much kinder.
Do you hold an account with BCA or Manheim? I stopped using my BCA Silver account card last year, couldn't stomach the fees. Manheim are much kinder.
No account held anywhere.
The fact that there can be interpretations of matters that should surely be clear-cut has always seems like such an odd feature of car auctions. I'm back to being confused again!
I won't be reclaiming VAT, as I'm not VAT registered. So, whether I buy a 'VAT qualifying' car or indeed a 'margin' car, I'd just be paying the hammer price plus the various auction house fees. Is that correct?
The fact that there can be interpretations of matters that should surely be clear-cut has always seems like such an odd feature of car auctions. I'm back to being confused again!
I won't be reclaiming VAT, as I'm not VAT registered. So, whether I buy a 'VAT qualifying' car or indeed a 'margin' car, I'd just be paying the hammer price plus the various auction house fees. Is that correct?
TheLordJohn said:
Ooooo, what you buying, what you buying, what you buying!?!
Terribly boring I'm afraid but the newest Golf Estate we can afford. It's a head purchase (we have got a daft car as well). Trouble is the Golfs that are on sale are all either ex-fleet cars or being sold by traders. No private ones at sensible money. Blackpuddin said:
Terribly boring I'm afraid but the newest Golf Estate we can afford. It's a head purchase (we have got a daft car as well). Trouble is the Golfs that are on sale are all either ex-fleet cars or being sold by traders. No private ones at sensible money.
The auctions are much more expensive than private in my experience you're better off looking of Ebay.Blackpuddin said:
I actually understood all of that. Many thanks.
Do you by any chance know what 'margin' means when it appears at the end of a car description?
Margin Scheme is how VAT applies to used cars that aren't VAT Qualifiers for traders and dealers. Do you by any chance know what 'margin' means when it appears at the end of a car description?
Edited by Blackpuddin on Saturday 14th July 21:16
VAT is due at 20/120ths on the gross margin between the purchase price and the sale price of the vehicle when it gets sold to your eventual customer.
Eg:
- A dealer or trader buys a Margin Scheme car at £5,000.
- They market it at £6,999.
- They incur £600 of costs - transport, warranty, mechanical check, MoT, a couple of tyres, advert costs etc.
- Somebody buys it for an eventual £6,800.
So the dealer or trader pays HMRC £300 in VAT (rather than the £200 it would be if they only charged VAT against net margins instead of gross ones).
Do your homework before you bid.
I went to BCA last week to buy some stock,narrowed it down to around a dozen or so vehicles I was interested in and researched their likely selling prices using Autotrader and Ebay.Over half the cars I was looking at could be bought cheaper by not using the auction,and thats before factoring in the buyers fee.As a private buyer buying a car at £5k to £8k your likely buyers fee would be around £500-600.
I went to BCA last week to buy some stock,narrowed it down to around a dozen or so vehicles I was interested in and researched their likely selling prices using Autotrader and Ebay.Over half the cars I was looking at could be bought cheaper by not using the auction,and thats before factoring in the buyers fee.As a private buyer buying a car at £5k to £8k your likely buyers fee would be around £500-600.
MarsellusWallace said:
Do your homework before you bid.
I went to BCA last week to buy some stock,narrowed it down to around a dozen or so vehicles I was interested in and researched their likely selling prices using Autotrader and Ebay.Over half the cars I was looking at could be bought cheaper by not using the auction,and thats before factoring in the buyers fee.As a private buyer buying a car at £5k to £8k your likely buyers fee would be around £500-600.
This seems to reflect what I saw at Mannheim Wimbledon I went to BCA last week to buy some stock,narrowed it down to around a dozen or so vehicles I was interested in and researched their likely selling prices using Autotrader and Ebay.Over half the cars I was looking at could be bought cheaper by not using the auction,and thats before factoring in the buyers fee.As a private buyer buying a car at £5k to £8k your likely buyers fee would be around £500-600.
BCA are by far and away the most expensive auction house for both private and most trade buyers in terms of fees and they have just put them up again for the second time this year. Many of their fees have jumped 50% in 2 years.
Manheim are better, though not a lot, but in terms of costs you're probably better at the "second tier" houses such as Aston Barclay, SMG etc.
Manheim are better, though not a lot, but in terms of costs you're probably better at the "second tier" houses such as Aston Barclay, SMG etc.
BCA remarket a lot of the more prestigious brands once they have come to a three year end-of-term, there is an abundance of late plate BMW, Audi and Mercedes. Due to the saturation of these cars at auction, they can be bought very keenly, leaving a healthy margin for the dealer. As far as I'm concerned, these are the only types of car that you can make money on at BCA - the ones that require a big investment. The average Joe trader such as myself, who buys middle-of-the-road Ford and Vauxhall and doesn't do a huge volume, cannot afford to pay BCA prices. God help the traders with forecourts!
Contrary to the above, I'm sure a Golf estate can be bought very cheaply at auction, I'm assuming it's a late plate sort of car you'd usually find at the main dealers, and they're not all that popular either, are they?
Contrary to the above, I'm sure a Golf estate can be bought very cheaply at auction, I'm assuming it's a late plate sort of car you'd usually find at the main dealers, and they're not all that popular either, are they?
ajb85 said:
BCA remarket a lot of the more prestigious brands once they have come to a three year end-of-term, there is an abundance of late plate BMW, Audi and Mercedes. Due to the saturation of these cars at auction, they can be bought very keenly, leaving a healthy margin for the dealer. As far as I'm concerned, these are the only types of car that you can make money on at BCA
My last trip to Blackbushe I was looking at these sort of cars and they were trading for more than i've seen them advertised in garages. A few cars to be fair went for around trade price but these were cars suchs as SL500 and your bigger engine models that would be hard to shift. Everything else was going for stupid money.FLASHG1981 said:
My last trip to Blackbushe I was looking at these sort of cars and they were trading for more than i've seen them advertised in garages. A few cars to be fair went for around trade price but these were cars suchs as SL500 and your bigger engine models that would be hard to shift. Everything else was going for stupid money.
They are rarely trading more than they do at garages like for like. The perception can be the case but check you are comparing direct cars. If they were always doing this garages would be selling all their cars at BCA rather than expensive forecourts!Let's face it, no garages is going to sell cars for £20k with premises, salespeople, warranties, prep etc. if they could get £21k bunging it in BCA where it is sold in 1 week with no comeback.
MarsellusWallace said:
Do your homework before you bid.
I went to BCA last week to buy some stock,narrowed it down to around a dozen or so vehicles I was interested in and researched their likely selling prices using Autotrader and Ebay.Over half the cars I was looking at could be bought cheaper by not using the auction,and thats before factoring in the buyers fee.As a private buyer buying a car at £5k to £8k your likely buyers fee would be around £500-600.
this a a very good point. I've bought a few cars privately from auction but not recently as its not worth it anymore, I've seen ridiculously high hammer prices on some vehicles. Of course you can still 'get lucky' but to do this you have to broaden the search i.e. apart from model you shouldn't be too selective on colour, spec, etc. I went to BCA last week to buy some stock,narrowed it down to around a dozen or so vehicles I was interested in and researched their likely selling prices using Autotrader and Ebay.Over half the cars I was looking at could be bought cheaper by not using the auction,and thats before factoring in the buyers fee.As a private buyer buying a car at £5k to £8k your likely buyers fee would be around £500-600.
confused_buyer said:
They are rarely trading more than they do at garages like for like. The perception can be the case but check you are comparing direct cars. If they were always doing this garages would be selling all their cars at BCA rather than expensive forecourts!
Let's face it, no garages is going to sell cars for £20k with premises, salespeople, warranties, prep etc. if they could get £21k bunging it in BCA where it is sold in 1 week with no comeback.
It depends on how much the auction are taking as a cut from the seller. I am also including the buyers premium which is very high on the more expensive cars. I'm not sure there is a premium for being in the south east as well but there were like for like cars available cheaper if you are willing to travel for them. Let's face it, no garages is going to sell cars for £20k with premises, salespeople, warranties, prep etc. if they could get £21k bunging it in BCA where it is sold in 1 week with no comeback.
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