The future of Britain’s classic car market seems nebulous. Since Britain’s exit from the EU, automobile experts have complained over Brexit’s toll on the industry. Meanwhile, the world economy is yet to improve ever since the dawn of Covid-19.
From lofty taxes to an economic recession, Britain’s car market cannot get a break. The question remains, can the market keep up, or should investors back away?
From taxes to headaches
The UK requires all foreign vehicles to carry an Access/ Temporary Access (ATA) Carnet to enter the country. An ATA Carnet is a bond that assures one’s goods won’t disappear once they enter the country; it’s like a passport, but for goods instead of people.
ATA Carnets can be expensive, as they charge all goods about a few hundred pounds. When it comes to importing vehicles, an ATA Carnet charges an additional 40 per cent for a returnable bond payment. In other words, if one were to purchase a £1million vehicle, one would end up spending an additional £400,000 for importing fees.
However, ATA Carnets are not the only issue. Value-added taxes (VAT) have also complicated the market’s expenses. Since Brexit, car dealers are now required to pay an additional 20 per cent VAT to import any used cars from Europe that are less than 30 years old. This tax has proven to be challenging as many car collectors look out to Europe to find a rare-modern model that fulfills their needs. By consequence, a value-added tax has made this venture a lesser profitable experience for both buyers and investors.
To UK-based auction houses, more import fees and taxes means heavier expenses. British auction houses have historically held auctions around Europe and even sold EU-consigned vehicles in the UK. However, with new policies and implementations, the prospects of UK-based auction houses winning profits remains unclear.
Another bump on the road
Despite these challenges, members within the collectible-car industry intend on being resilient.
In an interview with thisismoney.co.uk, John Mayhead, head of UK valuations, stated: ‘What effect this may have on the average enthusiast is yet to be seen, but most seem determined to work around the problems and get back to normal as soon as possible. The UK has always been a mainstay of the classic car industry and it seems our industry is determined to succeed; whatever barriers are put in front of them.’
Even with lofty taxes, the case remains car-collecting has not fallen out of fashion. Since the pandemic, rather than back away, many buyers have flocked to the collectible car market. Online auctions have been normal, even before the pandemic.
As for those passionate about all kinds of automobile collections, not all collectibles may be doomed. Cherished number plates have risen in popularity. Since last September certain UK license plates have increased in value, while others have been proven to survive countless world wars and recessions.
As long as collectors are cautious, the collectible car market should not be disappearing any time soon.
