A Word on Tax and Estate Planning.

We want to clarify a common misconception: while cars are often classified as chattels, they are not all exempt from Capital Gains Tax (CGT). HMRC and tax authorities around the world are increasingly scrutinising the ownership and sale of high-value vehicles, and it's essential to understand the tax implications before making any investment decisions.

For example, if a car is purchased using company funds, it becomes crucial to prove that the asset was not connected to the business in any way, but was instead a personal purchase. Additionally, whether the car was intended as a personal asset or as an investment can also influence its tax treatment. 

These questions must be addressed clearly, as they can impact whether CGT applies when the vehicle is sold or transferred.

Inheritance Tax (IHT) and estate planning are also key considerations, particularly for collectors who hope to pass on their collections as part of their legacy. Unfortunately, many collections are sold or broken up after the owner’s passing due to the high costs of maintenance or the tax burden on heirs.

To mitigate this, a well-structured multigenerational plan, such as holding the collection in a trust, can help. This strategy can reduce ongoing costs like upkeep, insurance, and storage, while potentially lowering your IHT liability. If your collection is housed in a barn or similar structure, it’s important to factor in future capital improvement costs, which may arise even after you’re gone.

Navigating these tax considerations with expert advice is essential to ensure your collection is properly managed, both for today and for future generations. We are here to provide clear, precise guidance tailored to your unique situation in collaboration with your wealth manager.

Feel free to reach out if you have any questions or need assistance with your investment or estate planning we would be delighted to work with your chosen FCA regulated advisor.