Friday, May 15, 2009

Classic car leasing

Mark Wadsworth brings up an interesting point regarding the car scrappage scheme.

The £2,000 incentive under the Government's "cash for bangers" car-scrappage scheme will be wiped out in just 88 days due to depreciation, it has been revealed.

It's also worth pointing out that few dealers - if any - are prepared to offer the usual discounts that could be negotiated if your taking part in the car scrappage scheme. That alone could wipe out any perceived benefit for the buyer.

Whilst on the subject of cars, I wonder how many people are aware of the benefits of choosing a classic car instead of a new model for their company car? If you're the sort who qualifies for a company car, but doesn't do an awful lot of company miles then you can save a fortune in tax by choosing a car over 15 years old with a current market value more than the original list price.

Hmmm - is there a market to be exploited there? Classic car leasing? What was the list price of a '78 Triumph Stag or a '64 Zephyr 6?

'Scuse me - I've got a business plan to write.

12 comments:

Pete said...

Just so. Was on the car ferry to Calais yesterday and before my eyes was a pristine red drop-head E-Type - I was allowed to drive my boss's in the 60's - incredible!
(I think it cost him around £2700!)

SpeedFlux said...

I'm don't like to buy a car by leasing.

Mark Wadsworth said...

Ta for link.

For tax purposes, a 'classic car' leads to a higher tax bill than otherwise: seeing as Rule One is that the car benefit is based on list price, there would be an advantage in having a lovely old car with a list price of a few £100 or a few £1,000 bu a high market value.

Therefore, if ...1. The car is > 15 years old
2. Its market value is > £15,000
3. Its market value is > list price
You get taxed on market value and not the lower list price.

What you really need is a car with a very low list price but which is worth < £15,000 (regardless of age, really), that gives you the lowest taxable benefit.

Stan said...

So, if you have a 1962 Mk 1 Cortina (list price around £700 - current value around £3000 in good nick) that would give you the lowest taxable benefit?

Mark Wadsworth said...

Yes, you'd be taxed on a benefit of x% x £700.

But in the spirit of your original post, what you want is a car with a list price of £700 and a market value of £14,999 - you still get taxed on x% x £700.

Stan said...

True, but some classics appreciate rather than depreciate so you'd need to be careful what you choose. It's also pretty hard to find a classic car with an original list price of £700 that is now worth £14999, but isn't going to appreciate!

Anonymous said...

Don't bother with the Stag unless it's already had its engine changed for something that works for more than a week or two.

Stan said...

Lol, Anon - I think most Stags that are still on the road will have had their problems sorted!

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valfrid said...

For the application of the tax, "classic" leads to tax bill, or else: as a general rule that the car was based on the price list, it would have the advantage of a nice old car with a price list some £ 100 or £ 1,000 Bou high market value.Company car leasing

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