Is it worth me starting a sideline selling cars from home?

[Jaaack]

Morning all,

Currently off work and getting quite bored (see post history for gory details) so having all sorts of ideas of how to earn a bit of extra cash while doing something as a bit of a hobby when I'm back on my feet.

There are certain types of car that can be bought in Japan, in mint condition for a few hundred quid. A lot of it is non-PH stuff, but some pretty interesting turbo nutter machines are available at decent prices.

For example, I've just spotted a car for around £600 in Japan, could have it landed for around £1600 (+30% tax, taking the total to £2080). Similar condition ones sell for a minimum of £3500-4000 here. After deducting the cost of getting it home from the port, registered, MOTd etc, there's maybe a £1000-1500 profit. That's just from a quick search on one of the many Japanese sites with cars for sale so take the numbers with a pinch of salt, better deals are negotiable if buying and shipping 3 cars at a time etc.

At what point does it need to be setup as a business and done 'properly'? Can I sell X number of cars as personal sales as a hobby?

I work full-time for a large company that has decent employee benefits and pays well for the work that I do, so I'd not want to leave there and rely on this as my source of income.

If I had to do it properly and inform HMRC etc, would it even make sense to do it? Last year I just scraped by under the 40% tax threshold, is my understanding correct that if in the same situation this year and importing cars took me over this, it'd basically wipe 40% of profits straight away?

I've only ever had one employer (apprenticeship as soon as I left school) and that's been full-time so I've never had to worry about taxes etc, so I'm pretty clueless in that regard.

It'd be done as a hobby that can bring in a few extra quid when work is quiet on the overtime front.

Would like to hear some of your thoughts on the idea...

Cheers

Edited by Jaaack on Friday 12th July 02:50

[PhilboSE]

My understanding is that if you are buying and selling cars with the intent to make profit then you are a trader regardless of how many you sell and even if you make money or not.

As a trader to be legal you would have to declare the profit as income for tax purposes and you would also have legal obligations to your customers that you would not have if you were a private seller.

If your declared profit took you into the 40% bracket then yes you would have to pay that much out via Self Assessment.

[ESOG]

I think i remember reading that you are allowed to sell up to 5 vehicles a year privately. After that its considered trade?

[PhilboSE]

I believe that’s a guideline to assert trader status in the situation where you have someone who is trading trying to fly under the radar as a private seller.

There’s no law against changing your private vehicle frequently and even making a profit on it. But if you are acting with the intent to make a profit then you are, strictly, a trader. It just comes down to how the authorities would prove your intent if they wanted to make a case against someone masquerading as a private seller.

[glenrobbo]

Not at 3 o'clock in the morning.

[Tlandcruiser]

Ive imported two cars for my own personal use and I would not recommend doing it for a profit unless your in the trade or have good contacts/relations to get cheaper prices,

Have you budgeted for the following;

payment transfer fees (sending money to japan etc)
Agent handling charges for customs clearance
Port unloading fees which is not including in the shipping fees
transport costs from the port to your house
parts (fog lights, speedo conversion) and labour to pass mot or IVA if under 10 years old and MOT/IVA fees (unless you do the work yourself)
Reg fees, first 6 months tax (although you will get the unused tax back)
Radio FM frequency booster (cheap ones are crap)
number plates


Any defects that require repairing, both cars I imported oddly required wheel bearings, one had the wrong size wheels fitted which needed a complete set of alloys ( they had bolted 60mm hub diameter alloys onto 64.1 hubs which ment the alloys did not sit against the hubs. (the wheels had been changed prior to sale in japan, but from the pictures you could not tell the wheels where the wrong size.

I think If I was able to sell the latest one, I might make a £1000, but that would not take into account my time to do all the above. you can then make further savings by impoting more cars from japan by cheaper fees from the agents and customs agents, own a trailer etc

The used car market seems quite slow at the moment.

[Eric Mc]

Has been discussed many, many times in "The Business Forum". I suggest you have a look over there to see what people have said over the years.

[bristolbaron]

PhilboSE said:

I believe that’s a guideline to assert trader status in the situation where you have someone who is trading trying to fly under the radar as a private seller.

There’s no law against changing your private vehicle frequently and even making a profit on it. But if you are acting with the intent to make a profit then you are, strictly, a trader. It just comes down to how the authorities would prove your intent if they wanted to make a case against someone masquerading as a private seller.

Correct. The sale of even one vehicle purchased with the intention to make a profit should be declared to HMRC.

The ‘five’ cars number is the average point at which the DVLA may make contact with you and/or HMRC to confirm trade status and where you could start having issues if you’re not keeping proper books/declaring.

In terms of insurance, most trade policies will want to see 10 vehicles sold per year to qualify. You’ll need to keep records of receipts or purchase and sale. You’ll also pay through the nose for imports which will cut a huge chunk out of profits.

All in all, it’s a struggle to make any money if you’re doing it legitimately but without volume!

[bloomen]

I would pay substantial amounts of money to not have to deal with the utter mindlessness that is the buying public.

You'd be much better off not bothering with cars. Parts would be vastly less painful. People have a need for them and they don't turn into needy freaks when buying them either.

[JimmyConwayNW]

Exchange rate fluctuations make this really hard.

Why do you think at one time there were loads of jap import specialists and now even though its easier to buy online and remotely there are less.

Give it a go, try it and if it works stick at it but I personally think it will be a whole world of pain.

[shakotan]

Tlandcruiser said:

...IVA if under 10 years old and MOT/IVA fees (unless you do the work yourself)

Japanese vehicles aren't subject to IVA as they fall under one of the countries under the 'Mutually Recognised Type Approval' scheme (North America being another one).

[ChocolateFrog]

It seems like the more established JDM importers have someone based in Japan, which cuts out a lot of the guess work when studying auction pictures and inspection sheets.

Importing the odd vehicle for yourself is ok but I wouldn't want to be waiting at the docks knowing 1 fault could wipe out any 'profit' after all the hassle.

[red_slr]

Does your current employer have any restrictions on doing other forms of work whilst off sick? Some do.

[designforlife]

I think you would make more money with less hassle and comeback by filling a container with JDM aftermarket parts from Croooober/Upgarage and shipping it over to the UK.

[sjg]

shakotan said:

Japanese vehicles aren't subject to IVA as they fall under one of the countries under the 'Mutually Recognised Type Approval' scheme (North America being another one).

It still goes through the IVA process if under 10 years old but you don't need model reports or anything like that any more - that mutual recognition covers it. Quite straightforward but it means you do have to do things like convert the speedo to mph (more expensive these days with CANBUS wiring), you can't just leave it in kms.

Over 10 years old, MOT only (and you can leave it in kms).

I've just imported a car myself and it didn't really save me any money over buying from a dealer here. I suspect there's a bit more margin in buying low-grade stuff and fixing/tarting it up if you have a way to do it cheaply. As said, there's lots of little costs that add up - export paperwork, getting it to the docks, foglight, custom agents, etc.

[98elise]

ESOG said:

I think i remember reading that you are allowed to sell up to 5 vehicles a year privately. After that its considered trade?

These is no magic number. If you buy a car to sell for a profit, then you are a trader. Being a trader affects how you do business, and how you pay tax.

[CaptainSensib1e]

bloomen said:

You'd be much better off not bothering with cars. Parts would be vastly less painful. People have a need for them and they don't turn into needy freaks when buying them either.

I'd agree with this. Just buy write offs, strip them for parts and you should make a tidy profit.

[LeoSayer]

Who is inspecting and buying the car in Japan?

[SnowStar]

Definitely have a go, but if you really want to make some coin, watch the classifieds. A profit of a grand is easy to make on local, ready to sell cars people just need off their drives.

[Tlandcruiser]

LeoSayer said:

Who is inspecting and buying the car in Japan?

no one and unless your dealing on a personal level/or close business relations with someone in japan...no one and don't believe anyone who says otherwise. All you will get is a translated auction report.