What is the Govt's stance on small personal profits?
Discussion
I know this will have been asked before, but i cant find a thread... so will ask again!
Over the last few years, i have (privately) sold a few cars, for a bit more than i bought them for, not intentionally as such, but that was simply the market price at buy/sell (not taking into account any inflation)
What is the official line on this from everyone's favorite agency: HMRC?
Is it simply a case of:
A: Nicely done sir, enjoy your steak.
or
B: Not a problem, but it depends how much profit you made.
or
C: I WANT ALL YOUR MONEYS
To be fully honest if it's B or C, they can go get bent (its not my fault the car rose in value!) - I pay my taxes, I don't subscribe to any avoidance schemes (although I have looked into it), they already get a VERY unfair share or MY earnings, and I get bugger all back, I mean SOD ALL.
Over the last few years, i have (privately) sold a few cars, for a bit more than i bought them for, not intentionally as such, but that was simply the market price at buy/sell (not taking into account any inflation)
What is the official line on this from everyone's favorite agency: HMRC?
Is it simply a case of:
A: Nicely done sir, enjoy your steak.
or
B: Not a problem, but it depends how much profit you made.
or
C: I WANT ALL YOUR MONEYS
To be fully honest if it's B or C, they can go get bent (its not my fault the car rose in value!) - I pay my taxes, I don't subscribe to any avoidance schemes (although I have looked into it), they already get a VERY unfair share or MY earnings, and I get bugger all back, I mean SOD ALL.
Edited by darkcat on Wednesday 21st November 09:12
I don't think it's a hard and fast rule but if you're selling less than about 1/2 dozen cars per year then it's unlikely that the council planning department or Trading Standards or HM Revenue & Customs will take any interest.
As far as planning and Trading Standards are concerned, whether you make a profit or not is irrelevant - it's the turnover that matters. If you sell 20 cars in a year and sell every one at a loss they will still regard you as a trader. That's if they can be arsed.
As far as planning and Trading Standards are concerned, whether you make a profit or not is irrelevant - it's the turnover that matters. If you sell 20 cars in a year and sell every one at a loss they will still regard you as a trader. That's if they can be arsed.
It would be Cap gains that would apply as this is a not business related profit, but if it Its your car, ie registered privately in your name and not bought by you to trade for a profit then Cap gains is not applicable as per:-
http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm
Try Google next time, took me approximately 12 seconds to confirm my initial expectation that the above was the case
Now, that is not to say that if you were selling lots of high value cars that you just happened to have registered in your name, but then sold not long after then someone might get suspicious. I did once get a call from privilege completely out of the blue because they thought that i had swapped my car too many times in something like 2 years, I told them, truthfully, that i get bored and change cars a lot! Never really made any money on cars, but if there was something interesting on offer that i could change to for not much the wrong way then i would often do it.
http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm
Try Google next time, took me approximately 12 seconds to confirm my initial expectation that the above was the case
Now, that is not to say that if you were selling lots of high value cars that you just happened to have registered in your name, but then sold not long after then someone might get suspicious. I did once get a call from privilege completely out of the blue because they thought that i had swapped my car too many times in something like 2 years, I told them, truthfully, that i get bored and change cars a lot! Never really made any money on cars, but if there was something interesting on offer that i could change to for not much the wrong way then i would often do it.
Edited by big_boz on Wednesday 21st November 09:04
No capital gains on cars because they are classed as a wasting asset.
However, if your buying and selling is such as to amount to a trade, then you will be liable to pay income tax on the profits. The flip side of this particular coin is that you would also be entitled to offset any losses against other income. The bottom line is: you're either trading (in which case any profit or loss must be brought into account) or you're not (in which case you may enjoy the profit but must bear the losses). Whether or not you are trading is a question of fact and degree. There are too many indicia to list here.
However, if your buying and selling is such as to amount to a trade, then you will be liable to pay income tax on the profits. The flip side of this particular coin is that you would also be entitled to offset any losses against other income. The bottom line is: you're either trading (in which case any profit or loss must be brought into account) or you're not (in which case you may enjoy the profit but must bear the losses). Whether or not you are trading is a question of fact and degree. There are too many indicia to list here.
darkcat said:
I pay my taxes, I don't subscribe to any avoidance schemes (although I have looked into it), they already get a VERY unfair share or MY earnings, and I get bugger all back, I mean SOD ALL.
You get nothing back? Do you not use roads?Presumably you have a private guard for your house?
And you went to a fee-paying school? (though a waste of money seemingly in your case
)I expect you even have a level of health insurance cover that even Roman Abramovich doesn't have that includes A&E treatment?
darkcat a bit later on][I earn said:
under 20k
Ahhh so actually you are not paying an unfair share of tax after all.darkcat said:
Adam - thanks for that, and I'm in exactly the same camp as you, I get bored fast, 3x this year!
Actually I think I've made about £1k profit, if that, so they have had that back as road tax and petrol anyway!
That is an impressive garage for someone who "earns" sub £20k, but i see you are free lance so i assume your earnings are somewhat more than £20k Actually I think I've made about £1k profit, if that, so they have had that back as road tax and petrol anyway!
I used to manage about 3 a year through my mid 20's, often rubbish, but the odd gem, too much time spent going to the local auctions was the main culprit, the wife put the anchors on that though......
big_boz said:
That is an impressive garage for someone who "earns" sub £20k, but i see you are free lance so i assume your earnings are somewhat more than £20k
Not at all m8, i saved up for YEARS to buy the first Chimaera, and have been trading up on that initial chunk of cash since. I'm Ltd you see, so it all has to go through the books.
darkcat said:
Not at all m8, i saved up for YEARS to buy the first Chimaera, and have been trading up on that initial chunk of cash since.
I'm Ltd you see, so it all has to go through the books.
Im LTD too fella...you cant fool me...I hope you fill in all your dividend paperwork properly I'm Ltd you see, so it all has to go through the books.
I wish i had done as you have and saved up over the years though rather than swapping all the time, would be in something far more interesting if i had!
God help the wife when we finally get round to building our own house and i have space to expand my Stable!
big_boz said:
Im LTD too fella...you cant fool me...I hope you fill in all your dividend paperwork properly
I wish i had done as you have and saved up over the years though rather than swapping all the time, would be in something far more interesting if i had!
God help the wife when we finally get round to building our own house and i have space to expand my Stable!
I see you're also an accountant I wish i had done as you have and saved up over the years though rather than swapping all the time, would be in something far more interesting if i had!
God help the wife when we finally get round to building our own house and i have space to expand my Stable!
Yes indeed, all correct and above-board (no, really!) - you know how it works...
certainly this year i have earned less than 20k, far less, as 2 contracts fell through.
Ever since one of my mates got done for 7yrs back taxes, and it took him several years to get himself out of the s
t, along with a nervous breakdown ( those buggers are thorough)!! i have always declared anything i earn. normally my extra income is between 400-600 pa BUT with the added bonus of knocking of the miles done on business and the ratio of this to gross miles done and this is taken off the 'profits' there isnt much left to be taxed on. It keeps me on the good side of the Taxman, and as i was told yearsagowhen i paid them a visit at thir offices,'We will say what you cant claim for, we dont tell you what you can'
Works for me.
t, along with a nervous breakdown ( those buggers are thorough)!! i have always declared anything i earn. normally my extra income is between 400-600 pa BUT with the added bonus of knocking of the miles done on business and the ratio of this to gross miles done and this is taken off the 'profits' there isnt much left to be taxed on. It keeps me on the good side of the Taxman, and as i was told yearsagowhen i paid them a visit at thir offices,'We will say what you cant claim for, we dont tell you what you can'Works for me.
You have a 10.6k capital gains allowance.
The thing I'd be more worried about is being sued by a buyer who has a nasty accident, comes back to you for answers and you have no public liability etc. If it could be proved you are trading, you could well be ruined.
Do it properly or not at all.
The thing I'd be more worried about is being sued by a buyer who has a nasty accident, comes back to you for answers and you have no public liability etc. If it could be proved you are trading, you could well be ruined.
Do it properly or not at all.
There's no CGT on cars. They're a depreciating asset. If Government wanted to claim CGT on the few cases where they gain value, they'd also have to allow offets for the 99.5% of cases where they lose value.
As for the OP's question... the test isn't how much profit you make. It's whether you're buying and selling as a trade. There's no hard and fast rules on what does and doesn't constitute trade. The HMRC has identified a number of "badges of trade" (Here: http://www.hmrc.gov.uk/manuals/bimmanual/bim20205.... ) and the more you satisfy the more likely it is they regard it as a trade and therefore taxable.
As for the OP's question... the test isn't how much profit you make. It's whether you're buying and selling as a trade. There's no hard and fast rules on what does and doesn't constitute trade. The HMRC has identified a number of "badges of trade" (Here: http://www.hmrc.gov.uk/manuals/bimmanual/bim20205.... ) and the more you satisfy the more likely it is they regard it as a trade and therefore taxable.
Gruber said:
There's no CGT on cars. They're a depreciating asset. If Government wanted to claim CGT on the few cases where they gain value, they'd also have to allow offets for the 99.5% of cases where they lose value.
As for the OP's question... the test isn't how much profit you make. It's whether you're buying and selling as a trade. There's no hard and fast rules on what does and doesn't constitute trade. The HMRC has identified a number of "badges of trade" (Here: http://www.hmrc.gov.uk/manuals/bimmanual/bim20205.... ) and the more you satisfy the more likely it is they regard it as a trade and therefore taxable.
If you are deemed to be trading then unfortunately there is a tax liability on a any gain.As for the OP's question... the test isn't how much profit you make. It's whether you're buying and selling as a trade. There's no hard and fast rules on what does and doesn't constitute trade. The HMRC has identified a number of "badges of trade" (Here: http://www.hmrc.gov.uk/manuals/bimmanual/bim20205.... ) and the more you satisfy the more likely it is they regard it as a trade and therefore taxable.
Flipping of cars not regsitered in your name is trading. The grey area is selling 15 cars registered in your name each year = suspicious.
HMRC need to haul in certain online auction sites and get them to hand over details. I bet there is hundreds of millions of pounds of tax due...
One reason Greece went down as too many people avoided their taxes. We're all apalled at certain companies using the UK to operate and paying little tax.
If you are wanting to trade do it properly.
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