In the wake of the Autumn 2024 Budget, classic cars have become an even more attractive investment, thanks to their exemption from the newly increased Capital Gains Tax (CGT). With the rise in CGT rates—jumping from 10% to 18% for the lower rate and from 18% to 24% for the higher rate—many traditional investments are facing heavier tax burdens. However, classic cars remain unaffected, classified as ‘wasting assets,’ which makes them tax-efficient compared to other financial assets.
Classic Cars: A Unique Opportunity
While the CGT rise impacts most asset sales, classic cars purchased for personal use are exempt. This legal classification as ‘wasting assets’ means that the CGT does not apply to them, unlike stocks, property, or other valuables. Cars used for personal enjoyment, whether for daily driving or collection purposes, continue to enjoy this special tax treatment.
Tom Wood, founder of Car & Classic, highlights the unique appeal of classic cars as investments. “Unlike other assets, classic cars, while legally considered ‘wasting,’ often appreciate over time due to factors like restoration, rarity, and historical significance. For collectors, the CGT exemption adds even more value to these vehicles,” he states.
A Tax-Efficient Investment
For those considering investing in classic cars, it’s essential to note that vehicles must remain in their original ‘personal use’ configuration to qualify for the CGT exemption. Any modifications, such as converting a car for racing purposes, may change its tax status.
With the combination of tax advantages and the consistent appreciation of classic cars, this asset class continues to offer a compelling investment option. Car & Classic, Europe’s largest classic and specialist marketplace, invites enthusiasts and investors to explore its vast selection of vehicles available for auction.
Summary/Key Details:
- Capital Gains Tax Hike: CGT increased to 18% (lower rate) and 24% (higher rate).
- Classic Cars Exempt: Classic cars are classified as ‘wasting assets,’ making them CGT-free.
- Investment Value: Classic cars often appreciate in value, adding further investment appeal.
- Original Condition: To remain exempt, cars must be kept in ‘personal use’ configuration.
Explore more on classic cars for sale at Car & Classic: carandclassic.com
Source: Car & Classic
This article was crafted with assistance from Chatgpt
