Classic car specialists and enthusiasts may debate on what exactly they define as a classic car, but there are ‘official’ classes for different purposes. The DVLA and HMRC each have their own criteria and guidance around how they would declare a car a collectible.
How a car becomes a classic
As mentioned above, there are two official definitions of what makes a car a classic. One is for car tax purposes (DVLA)1and another is used by HMRC2 when looking to sell your classic (to calculate tax). As well as this, insurance providers may have their own take when it comes to covering your car.
For the DVLA (vehicle tax), officially known as Vehicle Excise Duty (VED); defines a classic car as:
- Built before 1 January 1983
- First registered for car tax before 8 January 1983 (to be used if you don’t know when your vehicle was made).
There are limitations though. If you meet the age requirements but use your classic car for trade and/or business purposes (hire and rewards for example), it will not be exempt from tax.
HMRC define a classic as:
- Aged over 15 years
- Worth £15,000 or more
Typically, when you come to sell your classic car, it will be exempt from capital gains tax (CGT). As the same with the DVLA, there are limitations. If you’re buying and selling classic cars with the intention of making money (profit), then this would be classed as classic car trading. This means having to pay corporation tax, the amount dependent on the level of profits. This could be 19% or 25%.
Classification types
As you’ve read, the DVLA and HMRC have their own broad criteria of what makes a car a classic. Classic car experts have further classified vehicles into sub-categories. These categories can help with valuations and are widely used by insurers3.
If you have a classic car to insure, call Caleb Roberts on 01547 528028 to get a quote, we have a number of specialist insurers who will offer terms.