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If you鈥檙e looking to put your car up on the market, you may be asking yourself 鈥榙o I need to pay tax when selling my car?鈥� The short answer is 鈥榥o鈥�, you do not need to pay any tax when selling your car, though there are some limited circumstances in which you might.

This guide will explain whether you鈥檒l need to pay taxes when selling a car, whether they鈥檙e subject to Capital Gains Tax, and what circumstances might result in you having to pay tax when you sell a car.

Remember, you can buy a brand new or used car right here on 莲花直播. And you can also sell your car, too. We鈥檙e here to help you through every step of your car-changing journey.

Do I need to pay Capital Gains Tax when selling my car?

Capital Gains Tax (CGT) is a levy applied on profits made from selling certain possessions or financial and business assets. Profits from selling possessions worth 拢6,000 or more are subject to CGT, as are profits from shares, and property that is not your main home.

Cars, however, are exempt from Capital Gains Tax, as they are considered a 鈥榳asted asset鈥�. This means they are viewed by HMRC as having a 鈥減redictable life which does not exceed 50 years鈥�, while also being 鈥渓ikely to become less valuable鈥� over time.

But the car market has been hugely changeable in recent years: while some classic cars have been appreciating in value for some time, more run-of-the-mill second hand cars have in some instances risen in value, as demand for them has soared due to new models being subject to supply shortages and long waiting lists.

Some recent or soon-to-be owners of new models, meanwhile, have seen dealerships offer to buy their cars from them before or shortly after they have taken delivery as other customers, keen to beat the queues, may be willing to pay above-market prices for brand-new models.

These situations have resulted in instances where cars have made money but, despite this, the 鈥榳asted asset鈥� rule means they are not subject to CGT.

Are all vehicles exempt from Capital Gains Tax?

Private cars, like those you and I use on a daily basis or perhaps keep as a second car for high days and holidays, are not subject to Capital Gains Tax, but other types of vehicle can be.

This includes (information taken from HMRC guidance):

• Taxi cabs
• Racing cars
• Single-seat sports cars
• Vans, lorries and other commercial vehicles
• Motorcycles, scooters or motorcycle/sidecar combinations.

Given this is a matter of tax, the issue is not necessarily as straightforward as that list might imply, however.

Such vehicles are classified as 鈥榤achinery鈥� by HMRC, which means they can be considered a wasting asset, unless they 鈥渨ere, or could have been鈥� subject to tax relief from capital allowances.

As we say, tax is rarely a straightforward matter, so if you鈥檙e in any doubt about whether you may have tax obligations as a result of selling a car, it鈥檚 best to speak to an accountant, tax expert or similar professional.

When do I need to pay tax when selling a car?

You generally don鈥檛 need to pay tax when selling a private car as it鈥檚 exempt from CGT. However, you might receive a refund for any remaining Vehicle Excise Duty paid on the car, which is usually factored into the price when you get the car.

Do I need to pay road tax?

You don鈥檛 have to pay road tax on a car you are selling; indeed, the opposite may be true and you will be able to claim road tax back for any complete months you have paid for past the date of sale.

Assuming you complete the transfer process properly when selling your car, you should receive a cheque from the DVLA automatically for any road tax you are due back, though we have a separate guide for cancelling car tax should you need more information on this topic.

FAQs

Do I get tax back if I sell my car?

Any outstanding months of car tax are refunded back to you when you let the DVLA know that you no longer own the car. This refund is processed automatically by the DVLA once they get your notification.

How many cars can you sell a year without paying taxes?

You can sell as many private cars as you like without paying tax as the UK considers these wasted assets. But if you鈥檙e selling a commercial or business vehicle (i,e, vans or sports cars), the sale will be subject to capital gains tax every time. You must also report the sale to HMRC.

Car change? 莲花直播!

Looking for a new set of wheels? With 莲花直播 you can sell your car quickly and for a fair price 鈥� as well as find great offers on your next one. Whether you鈥檙e looking to buy a car brand new, are after something used or you want to explore car leasing options, 莲花直播 is your one stop shop for new car deals.

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