Not so much a new arrival, but selling my XE for an upgrade

[Sherstrand]

Hi all. I am going to be selling my 2016 XE and using that money to upgrade to either an F-Pace or E-Pace, as we need the space and the XE just doesn't quite cut it anymore. I've never sold a car before, only bought two and both were given away to family. I'm intrigued as to how tax works on car sales - does the money count as normal income and taxed accordingly, or is it something else? If it is taxed normally I would be pushed right into the higher tax bracket (currently only benefits and bonuses from work put it above the bracket) according to this salary calculator. Should I be worried about this or does it not matter? I can't find anything particularly meaningful online, so could use some resources or someone that knows better than me.

Thanks in advance!

[davidr]

You will only have to pay tax on a car sale if you are doing it as a business. Selling your private car is not taxable income so no need to worry about that.

[RichardSEL]

Similar questions have been going the rounds on various car make support groups for years -- essentially there's no hard and fast rule so tax inspectors make it up as they go along. Or so it seems...

As previous poster said if you're in business as a car trader then you'd have to declare your incomes and outgoings. And pay tax on the profit remaining after taking out your salary (or "emolluments" ) The tax burden would then fall on those.

The difficulty comes in defining what is a "car trader". The best I've been able to come up with from HMRC help line is "you're a trader if you purchase a car with the intent of selling it". But that help desk couldn't point me to any published practice note on that.

Few years back there was row with HMRC when they prosecuted someone for non-payment of taxes on the slim proofs of five cars being sold in one financial year. One of which was the subject's daily. Course, Amazon, Vodafone, EBait, and all the other multi-billion businesses that make sales in the UK but conduct them in Eire pay only what they want to pay. Meanwhile innocent self employeds like plumbers, electricians, and car sole traders get the whole force of the State laid against them...

[PPV]

There is no tax on an individual selling their own car.
At present there are some cracking part exchange deals on offer if you shop around. Take a Carwow valuation and then go to a dealer. They will beat it for the business especially if you are buying a diesel!
Regards,

[poprivet]

And of course the advantages of a trade in. Yes you might not get quite as much as a private sale but it is seamless, no advertising costs, no comeback or dodgy £50 notes. Drive your old car in and your new one out.