Inheriting and transferring ownership of a classic car


Two people transferring ownership of a car

Inherited a classic car? Or perhaps you’re looking to give your own away? In this article, we go through your options so you can work out what’s best for you and your family – and avoid any speed bumps in the process.

It’s undoubtedly a difficult time for all involved when a family member passes away. The last thing you’re going to want to do is think about is legal implications. But these things are important, and we want to help make the process as smooth as possible for you.

You can expect to learn things you need to think about when inhering and transferring ownership of a classic car such as tax and insurance considerations.


Legal implications

Transferring ownership of a classic car

When inheriting a classic car in the UK, the process of transferring ownership involves several legal steps. Although the vehicle is categorised as ‘chattel,’ meaning it is a personal possession, the ability to legally transfer ownership or sell the car typically cannot commence until the probate process is complete. This process confirms the legal transfer of the deceased’s assets to their beneficiaries.

It is important to initiate the process of formally declaring your ownership of the car to the DVLA as soon as possible after inheriting the vehicle. Ensure you have essential information readily available, such as your relationship to the deceased and the date of their passing. This proactive step is vital for smooth ownership transition and compliance with legal requirements.


Insurance considerations

When someone dies, the deceased’s insurer will need to be notified to cancel the policy. The insurance company should be provided with the death certificate and a copy of the section of the will which details who the executors are so that the policy is cancelled with the estate’s permission.

There are a few options that you can do next:

  • Option 1: If you’re the new owner of the vehicles and wish to drive them, you can take out a new insurance policy in your name.
  • Option 2: If you’re not planning to drive the car anytime soon, or are still thinking about what you want to do with your new classic car, you don’t legally have to take out car insurance if it’s off the road – but you must let the DVLA know. This is done by submitting a Statutory Off Road Notification (SORN), which allows you to forego car insurance, as long as the car isn’t being driven at all.

Although not legally required to be insured if off the road, the vehicle can still be targeted by thieves and can be damaged. So we advise considering Laid Up Insurance so you’re able to claim for theft, fire and accidental damage that the vehicle sustains while laid up.


Financial implications

Capital Gains Tax

You’ll be pleased to know that you don’t have to pay Capital Gains Tax (CGT) on your inherited classic car if you decide to keep it. But there are CGT implications if you decide to sell it and it has appreciated in value since the date of inheritance to when it is sold.


Inheritance Tax

Around 96% of people aren’t affected by Inheritance Tax (IHT) as most families fall below the threshold. In most cases, classic cars are considered to be part of the deceased’s overall estate and is subject to IHT at 40% on estates valued over £325,000.

For collectors with a high-value home and a selection of mid to high value vehicles, IHT is likely to come into play. So, estate planning is important, especially if you’re planning to pass your classic car collection to anybody apart from your spouse.

In very rare cases, your classic car might be considered a national heritage asset, meaning you don’t have to pay Inheritance Tax (IHT) on it, but this won’t be the case for most people.


When is a car exempt from Inheritance Tax?

In the UK, certain gifts, including classic cars, can be exempt from Inheritance Tax under specific conditions, which can be beneficial for both the giver and the receiver. Here are the scenarios where a classic car might be exempt:

  • You choose to gift your classic car to your spouse
  • You gift the car(s) while you are still alive and live seven years after the transfer
  • You gift the car to charity
  • The car is a wedding or civil partnership gift. You can gift up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to friends or other relatives – without incurring IHT.
A collection of classic cars

Continuing the classic car ownership legacy

Now that we’ve spoken about the legal and financial implications you need to be aware of, hopefully you’ll preserve the legacy of owning a classic car.

When you’re forced to think about things like taxes and finances, the true value of something can get lost in the mix. The truth is that a classic car is worth far more than its parts – you only have to look at one to know.

You might want to hold onto the assets that the deceased was most passionate about, and you’d be right to do so. Even if you’re unsure to begin with, you might regret selling the classic cars down the line, so we recommend not rushing into it.

If the thought of owning classic cars has caught you off guard not knowing where to start, there are many guides out there which will help you look after the cars, including our 22 essential classic car maintenance checks and theft prevention methods.

At Heritage Insurance, we believe in preserving the classic. And when it comes to cars, we’ve got over 55 years’ experience.

For any insurance related queries you have, we’re more than happy to help with getting insurance policies transferred into your name seamlessly.

If you’ve recently inherited a classic car, and want to know your options for classic car insurance, speak to a member of our team by calling 0121 248 9229 or get a quote here:


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Disclaimer: This article is intended for informational purposes only and should not be considered as legal or financial advice. The information provided herein is based on general principles and may not reflect current legal developments or address your specific situation. We recommend consulting with a qualified professional who can provide advice tailored to your circumstances before making any decisions related to inheriting or transferring ownership of a classic car.