Today marks the end of the financial year for individuals and the government, and even if you’re not someone who needs to worry about self-assessment and filing on time, it’s the right time to make sure all the taxes that relate to your motorhome are settled up, paid and accounted for. As is so often the case with tax affairs, what should be a simple process isn’t always that easy. This isn’t just because it’s an administrative hassle, there are lots of clever and, occasionally, complex reasons why tax is charged in a certain way. To help explain, here are our top tips for dealing with any motorhome taxes you come across.
Motorhomes are all liable to pay road tax in the UK – it’s the price you pay for using the roads! Unlike in many areas in Europe, road tax is a flat fee you pay once a year and in the UK it’s based almost exclusively on weight. If your vehicle is under 3,500kgs, you can class it as a light goods vehicle, if it’s over, it becomes an HGV; a heavy goods vehicle.
There are some exceptions to this rule, and things like static caravans and campervans often cause confusion. If you have a specific case you can find out what you need to pay at the Department for Transport. You won’t be able to get tax without motorhome insurance documents, so make sure you’re covered first.
Capital Gains Tax
Capital gains usually only causes a problem to motorhome owners very occasionally and it’s based upon sales of capital items like vehicles. The bad news is that Capital Gains Tax (or CGT) is payable on any profits of a capital sale at a starting rate of 18%, but the good news is that if the gain is below £10,600 (for 2013) then there’s nothing to pay at all.
Remember that CGT applies only to the gain from capital: that’s the ultimate selling price less what you bought it for. Often motorhome users begin to worry about capital gains when they sell a vehicle for over £30,000, but unless you paid less than £20,000 for the vehicle, there’s no problem.
Value Added Tax (VAT)
VAT is due on all new motorhomes at a rate of 20% and will probably be included in the price you see advertised. If you’re buying new, this is absolutely worth checking: you never know! Private sales of second hand motorhomes are exempt from the scope of VAT.
Problems only really start to arise with VAT if you end up purchasing your motorhome from abroad. In the EU most countries will apply VAT automatically and you should be able to bring it through customs uncharged. From the USA or further afield, you may begin to encounter problems: it’s best to check with the dealer you buy from for advice.
Tax on Motorhome Rental
If you’re someone who lets out your motorhome at any point during the year, even if it’s just for a few weeks, you could accidentally find yourself running a motorhome rental business which could bring you under the scope of corporation tax, that’s 20% of any profits you make, in the UK.
However, to be considered for corporation tax you will need to be ‘trading’. There are a lot of complicated technical definitions that surround this, but in short you need to be repeatedly letting your motorhome with the aim of purely financial gain from it. If you let to two or three different customers throughout the year it could be worth having a look at your position.
In theory, there aren’t any other taxes in the UK that can be applied to motorhomes but there’s nothing to say that new laws couldn’t be introduced. It’s quite possible that we could see more toll roads in the future and, effectively, that could act as a motorhome tax, but there aren’t any other taxed you don’t pay up front.
If you’re ever concerned about what taxes you should be paying or don’t know how much to pay, you could contact the authorities or, if your affairs are particularly complicated, you could seek out an advisor. Usually small, local accountants are best for dealing with minor claims and they could save you cash in the long run.