A Statista DossierPlus study reported that the most important markets outside of the UK for classic cars are the US, Germany, and Italy. In fact, the US is the largest market for classic cars with an estimated 6-7 million collectable vehicles for sale.
In 2019, the global classic car market reached nearly 25 billion U.S. dollars and is expected to grow by 8.2 percent annually until 2023. According to the AXA Classic Car Market Review 2019 the EU has more than tripled its turnover in a single year, leaping from €52 million to €170 million. The penchant of car enthusiasts and investors for eye-catching vehicles means that classic car buyers are willing to source vehicles outside of Britain if the conditions are right. If you are sourcing your vehicle overseas to import back into the UK, you need to know how the process works and equally, how you can save money doing so.
1. Know your costs up front
If you are a classic car aficionado, you are already well versed in the ins and outs of the marketplace. However, it is vitally important to understand the costs that may be incurred throughout the process, so it is good practice to get clear projections before you buy.
How are you going to get the vehicle back to the UK? Are you going to drive it back if buying from mainland Europe or get a transportation company (which could cost you up to £1000 for the service)? If you are buying a car from further afield, shipping is usually the most cost-effective way of transporting a classic car from a far-flung location and your options here are Roll on Roll off (RoRo) and container shipment. The former are cargo ships designed to carry wheeled cargo that may be driven on and off the vessel. The latter is a better option if the classic you are purchasing cannot be driven and may also need work. If opting for container shipment, the vehicle is packed within a container which means costs will be higher. It is advisable to budget up to £2000 if considering RoRo from the US but be aware that container shipment can cost up to 4 times that amount. At the time of writing this article (November 2020), it is still unclear what kind of deal, if any, Britain will strike with the EU. As such the cost of importation costs could rise but this post will be updated with the relevant information once this is clear. Some useful transportation companies are listed below: https://www.autoshippers.co.uk/classic-cars.htm https://www.carseurope.net/ https://www.yftlogistics.co.uk/ It is important at this stage to weigh up if it is worth it in financial terms to import at all and to perhaps seek an alternative closer to home.
Foreign currency costs
Getting a better deal on the GBP/EUR, GBP/USD or other currency exchange rates could save you enough money to lessen the overall costs of importing your classic car. Few may realise it, but high street banks often charge up to 5% on their foreign exchange services with additional high fees that could end up costing you more than you had anticipated. Suppose you are purchasing a car in mainland Europe for €50,000. A difference of about 3 % on the exchange rate could save you approx. €1500, money that could be spent on transportation costs or body work on your new classic. Fexco is a specialist in currency transfers for high value items such as overseas property and classic cars purchases. Its online payment platform facilitates the transfer of money with a better exchange rate whilst avoiding excessive bank fees. You will also have access to a dedicated account manager who will make sure you are moving funds at the correct time (avoiding the negative effects of currency volatility). It is also much safer to have a transfer specialist available at the end of the phone, ready to transfer funds to the vendor rather than carrying cash to pay on location. Payments specialists can also get funds delivered faster than a high street bank, ideal for when you need to get your classic back quickly.
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2. How do I import a classic car from the EU?
At the time of writing this post, the UK is still in a transition period with the EU until the 31 Dec 2020 and as such, importing of a classic car from the EU is treated as a free movement of goods. This means that Single Market rules still apply, and the importation of a classic car is not treated as an import in the normal commercial sense. This also means that:
- You will not be liable for any import duty as if falls under the free movement of goods category.
- As VAT would have already been paid on the original purchase, you will not have to pay this.
A. The purchase stage If you are planning to drive the car back, it is important that the vehicle has the UK equivalent of an MOT. If purchasing in Germany for example, this is known as Hauptuntersuchung (HU). Another crucial step to take is insuring the car, especially if driving it back. There are many insurance companies which specialize in classic cars, so shop around. At this stage, the car’s VIN (vehicle identification number) can be used to get a certificate issued as the registration number will not factor in until later in the process. Depending on the country, you may also need to apply for temporary plates so please check out the regulations in whatever country you are purchasing from. There will also be additional fees attached:
- Get the original copy of the temporary registration document
- An official declaration of sale document signed by yourself, the seller and a solicitor should be collected. The sale price should be clearly shown.
- Get a certificate of ownership
B. Drive it back or have it transported by a reputable company C. Provide HM Revenue and Customs (HMRC) with the vehicle’s details within 14 days of its arrival and organize the MOT D. Register the car with the DVLA: You can download a form V55/5 from https://www.gov.uk/vehicle-registration and pay the registration fee of £55 as well as the cost of vehicle excise duty. Normally it takes a couple of weeks for your new V5C form to arrive via the DVLA (Driver and Vehicle Licensing Agency). The DVLA will need proof of the make, model, age, and spec of the vehicle so make sure you have the necessary paperwork to hand. The MOT test will need to ensure the vehicle is UK compliant with particular attention on front and rear lighting.
3. How do I import a classic car from outside the EU? (e.g. from the USA)
Importing a classic car from the US or any other location outside of the EU can be a more complicated. Most of the costs will be incurred on shipping and there is also the import duty and VAT to consider on goods coming in from outside of the EU.
What costs do I need to consider?
As previously mentioned, The US is the leading marketplace for vintage and classic cars. It is little wonder that British enthusiasts will hunt for a bargain here, but cost will dictate a lot. You will need to decide whether to engage an American company to look after transportation or employ a British firm with representatives on the ground to look after the entire process for you. Shipping insurance will be dictated by the value of the vehicle, but other cost factors include where in the States the car is located, distance to the nearest suitable port in the US, if the car is driveable etc. You could try out the calculator available on shipmycar.co.uk which offers a breakdown of costs involved in the entire import process including transport to port, shipping costs, marine insurance, UK import costs, UK testing (IVA / MOT) and DVLA registration. At the purchasing stage:
- Make sure you obtain key documentation, e.g., sale agreement, registration documentation.
- Use a trusted shipping company to ship the vehicle back to the UK
- You will need to pay the relevant Customs Duty and VAT on all vehicles imported from outside of the EU. Download and complete a C384 form for this purpose from the HRMC site.
- Contact HMRC and organize an MOT
- Register the car with the Driver and Vehicle Licensing Agency (DVLA)
Is there Duty and VAT to pay on my import?
Yes. Duty is rated at 10% (on the price of the car and the shipping costs combined), with 20% VAT then payable on that total figure (including the car’s purchase price and all the transport and insurance expenses). However, if the car is more than 30 years old and with no substantial changes to its chassis, engine, transmission, steering, brakes etc. then no duty and only 5% VAT on the total cost of purchasing and importing your car is applied. Exceptions: It is important to note also that if your car were originally manufactured in the EU (i.e., Jaguar, BMW) then you are just liable for an admin fee of just £50 rather than the 10% duty which would normally be imposed. This could result in significant cost savings. If you are importing a classic manufactured outside of the EU i.e., Cadillac, then the full 10% duty will be imposed. When you are considering all your costs, make sure to add in the UK and US port fees which will be approximately £200 and $235, respectively.
Fexco is a leading provider of international money transfers for high value purchases like classic cars and overseas property. Make significant savings on better FX rates and lower fees and avail of swift and secure transfers. Grab a free quote today.