# Buying a car (and taxes) in the UK?



## nicoledanny (Mar 9, 2011)

Ok, I googled this to death last night to no avail. A few forum members were talking me out of shipping my car to the UK, so I was looking at cars in the UK when a thought struck me.... How would I get a car loan over there? I have no credit, I will need a really reliable car right away (it is a work requirement), but I'll have no job history over there. By the time I move my current car will barely bring me 5000 pounds, if I'm lucky. I don't have any credit in Germany (where I'm originally from) either, never bought anything on credit before. Don't have credit cards now (don't like being in debt lol).

Also, I was wondering about income tax. My husband is a US citizen and I'm a German citizen. What does he do with US taxes?

Thanks anyone/everyone for their help. I did google "getting a car loan in the UK as a foreigner", "getting a car loan in the UK as an EU citizen"... and learned nothing lol. The tax thing, I will google some more. 

Our move to England will be permanent, if that makes a difference.


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## Joanne_Manchester (Feb 18, 2011)

nicoledanny said:


> Ok, I googled this to death last night to no avail. A few forum members were talking me out of shipping my car to the UK, so I was looking at cars in the UK when a thought struck me.... How would I get a car loan over there? I have no credit, I will need a really reliable car right away (it is a work requirement), but I'll have no job history over there. By the time I move my current car will barely bring me 5000 pounds, if I'm lucky. I don't have any credit in Germany (where I'm originally from) either, never bought anything on credit before. Don't have credit cards now (don't like being in debt lol).
> 
> Also, I was wondering about income tax. My husband is a US citizen and I'm a German citizen. What does he do with US taxes?
> 
> ...


Unfortunately you are correct in saying that you will have no credit in the UK, for loans they usually always ask to know your uk address for last 3 years.
You will have to start building your credit score with small things first (for example mobile on contract) , also make sure you are registered on the electoral list (play a part on credit score).
I had a friend who when he first started working in the UK (social worker) had a loan through work (they were taking it directly from his wage) to buy his car.


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## Joppa (Sep 7, 2009)

nicoledanny said:


> Ok, I googled this to death last night to no avail. A few forum members were talking me out of shipping my car to the UK, so I was looking at cars in the UK when a thought struck me.... How would I get a car loan over there? I have no credit, I will need a really reliable car right away (it is a work requirement), but I'll have no job history over there. By the time I move my current car will barely bring me 5000 pounds, if I'm lucky. I don't have any credit in Germany (where I'm originally from) either, never bought anything on credit before. Don't have credit cards now (don't like being in debt lol).
> 
> Also, I was wondering about income tax. My husband is a US citizen and I'm a German citizen. What does he do with US taxes?
> 
> ...


It will be very difficult to get a commercial loan of any kind to start with, as you have no credit record in UK. So you get automatically rejected for any loan, hire-purchase or leasing agreement as they all require your creditworthiness. You can understand why - lenders would put themselves at risk of being defaulted, as there is no track record of your making repayments, on time and in full. Loan from your employer is worth investigating, if they offer it.

What you should do is to use your £5k from the sale of your existing car towards a used car - that sum would buy you a small car still within warranty from a franchised dealer, which at least guards you against expensive repair bills. Once you've established satisfactory credit record, say after a year, you can trade your car in for something newer and better.

Remember, as a foreign driver with no UK licence and driving experience, your insurance will be more expensive, and only certain companies will quote you. Try Direct Line (contact by phone - don't use online quote engine) and Aviva - two companies known to be sympathetic to recent arrivals. Bring evidence of any claim-free record - it may be honoured.

Unless you have a German driving licence, a US licence is only valid for a year, after which you must pass driving tests to get full UK licence. A German licence is valid here until it expires. Exchanging for UK licence - no tests required - may help you to get lower insurance.

Any income earned in UK will be taxed locally, but your husband as a US citizen will still have to make his US tax return, and claim any foreign earnings exemption. For you, unless you are a US permanent resident, there's no need to file US tax return, and I don't think you need to make a return in Germany as you aren't a resident - so all the tax you pay will be deducted at source in UK. 
Bev is the expert on US expat tax returns.


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## Bevdeforges (Nov 16, 2007)

nicoledanny said:


> Also, I was wondering about income tax. My husband is a US citizen and I'm a German citizen. What does he do with US taxes?


Your husband will continue to file US income taxes in addition to any local tax filings. The year you move over, you will want to consider filing a joint return as there are a number of benefits he will lose when he files "married, filing separately" (depends on your circumstances). But if you do, they you will have to declare your joint worldwide income. Earned income (mostly salary) is subject to the Overseas Earned Income Exclusion, but to claim that you must file a return. Other income is subject to the tax treaties, mostly to avoid dual taxation on the same income. He should download pub 54 from the IRS website to get an idea of how the whole overseas reporting thing works.

You may want to take a look at IRS pub 519 (US Tax Guide for Aliens) to determine if you need to file a "sailing permit" - to notify the IRS that you are leaving the country. And, if you are a green card holder, you need to either surrender your green card or file something with the government to let them know your plans. The usual advice is to consider taking US nationality before you leave, to avoid hassles when returning to the US (either permanently or "just visiting"), but be aware that if you do, you'll then be subject to the lifetime tax filing obligation. (Though it will also mean that your husband and you can file jointly... there are advantages to that filing status, depending on your exact financial circumstances.)
Cheers,
Bev


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## nicoledanny (Mar 9, 2011)

Bevdeforges said:


> Your husband will continue to file US income taxes in addition to any local tax filings. The year you move over, you will want to consider filing a joint return as there are a number of benefits he will lose when he files "married, filing separately" (depends on your circumstances). But if you do, they you will have to declare your joint worldwide income. Earned income (mostly salary) is subject to the Overseas Earned Income Exclusion, but to claim that you must file a return. Other income is subject to the tax treaties, mostly to avoid dual taxation on the same income. He should download pub 54 from the IRS website to get an idea of how the whole overseas reporting thing works.
> 
> You may want to take a look at IRS pub 519 (US Tax Guide for Aliens) to determine if you need to file a "sailing permit" - to notify the IRS that you are leaving the country. And, if you are a green card holder, you need to either surrender your green card or file something with the government to let them know your plans. The usual advice is to consider taking US nationality before you leave, to avoid hassles when returning to the US (either permanently or "just visiting"), but be aware that if you do, you'll then be subject to the lifetime tax filing obligation. (Though it will also mean that your husband and you can file jointly... there are advantages to that filing status, depending on your exact financial circumstances.)
> Cheers,
> Bev


Oh yeah, I forgot about losing my green card. hahahaha. I've had it since 1986, when I was really really young (my mom married my stepdad when I was a baby). They got my birth dad to sign over his rights so my stepdad could adopt me... he never adopted me. So I became an adult and found out I would lose my German citizenship if I had American citizenship (I would've been dual if my stepdad had adopted me). I'll check into it, but as I will never move back here, it's not really important lol. Worst case scenario, I get new green card residency being married to an American. Nothing against the U.S. in general, I've just lived in not so good parts and this would be my life over here since my husband wants to live near family. So I'm done with that.

Thanks so much for the tax info! What a mess this will be


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## nicoledanny (Mar 9, 2011)

Joanne_Manchester said:


> I had a friend who when he first started working in the UK (social worker) had a loan through work (they were taking it directly from his wage) to buy his car.


That would be fantastic, I'll see if they do anything like that. Crazy how badly they need social workers over there, I had fight with many classmates for social work positions.


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## nicoledanny (Mar 9, 2011)

Joppa said:


> It will be very difficult to get a commercial loan of any kind to start with, as you have no credit record in UK. So you get automatically rejected for any loan, hire-purchase or leasing agreement as they all require your creditworthiness. You can understand why - lenders would put themselves at risk of being defaulted, as there is no track record of your making repayments, on time and in full. Loan from your employer is worth investigating, if they offer it.
> 
> What you should do is to use your £5k from the sale of your existing car towards a used car - that sum would buy you a small car still within warranty from a franchised dealer, which at least guards you against expensive repair bills. Once you've established satisfactory credit record, say after a year, you can trade your car in for something newer and better.
> 
> ...


I can totally understand why they wouldn't want to loan to me. I would say my oma and opa (grandparents) would help me out with a car, but that would be a German car again. No German license. I didn't learn to drive until I was 19 and had moved to the States. 

I'll check what I can get for 5000 pounds... we'll see lol. I've driven a beater almost my entire 20's (school, single mom, blah blah) until last year. Now I have a 2008 and I finally have a cd player and ac and heat!


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## StephM (Apr 1, 2011)

good question, this applies to us too.... i considered bringing my own car over but i think I'd end up paying more for it, so I'm going to sell it and use the money to get something there.

Beside a cell-phone, how else can one build a good credit record?


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## Joppa (Sep 7, 2009)

StephM said:


> good question, this applies to us too.... i considered bringing my own car over but i think I'd end up paying more for it, so I'm going to sell it and use the money to get something there.
> 
> Beside a cell-phone, how else can one build a good credit record?


Bank account, credit cards, name on electoral register (if qualified, e.g. British, EU or Commonwealth citizen), store credit, hire purchase, mortgage, other loans. Things that have no effect on your credit rating include savings, ISAs, investments.


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## nicoledanny (Mar 9, 2011)

Joppa said:


> Bank account, credit cards, name on electoral register (if qualified, e.g. British, EU or Commonwealth citizen), store credit, hire purchase, mortgage, other loans. Things that have no effect on your credit rating include savings, ISAs, investments.


Wow, thanks. How long do you think it would take to build up good credit with a store card, bank account. I've never had a credit card (know way too many people with horrid credit card debt here in America, so I've stayed away lol).

I contacted shippers and places that convert American cars to Euro spec (specifically around U.S. military bases). To ship my car will cost $945. To convert my car, will be roughly 1000 pounds. This is one of the quotes I got from a place highly recommended to me; they said they can talk me through the registration process as well:

"Lights to UK spec.
Parts & Labour - have allowed £50.00 for rear fog light. 
300.00 - 350.00plus VAT at 20%
IVA test fee 199.00 (No Tax)
MOT test fee (req. on veh. over 3yrs old) 50.00 (No Tax)
Presentation/transport to IVA testing station 85.00 plus VAT

Other cost may be for fuel, needs full tank at time of test.
I can apply for the test on your behalf, no extra cost, would need some vehicle details, plus UK address for yourselves.
At present the time from application to test date is approx. 14 days."

Is there anything I'm missing? It doesn't sound too expensive. I've been with my car insurance company for 6 years and I've never filed a claim for anything in my life, so hopefully that'll help with insurance costs. They can transport my car from the port to their location to my address. I don't know if I'll be needing that.

If I'm not missing something huge, I'm thinking I will end up shipping my car and then after building up credit, buying a newer car over there (with the steering wheel on the right side and everything lol).


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## Joppa (Sep 7, 2009)

nicoledanny said:


> Wow, thanks. How long do you think it would take to build up good credit with a store card, bank account. I've never had a credit card (know way too many people with horrid credit card debt here in America, so I've stayed away lol).
> 
> I contacted shippers and places that convert American cars to Euro spec (specifically around U.S. military bases). To ship my car will cost $945. To convert my car, will be roughly 1000 pounds. This is one of the quotes I got from a place highly recommended to me; they said they can talk me through the registration process as well:
> 
> ...


You probably won't be liable for import duty and VAT as you've used it in the US and you are moving permanently to UK, but it's worth a check.
What make and model is it? If the same model is sold in UK, getting most parts shouldn't be an issue but there are often specific parts for LHD car which need to be imported from US, with duty and tax on top of carriage.
As I've said before, your no claims discount earned in US may not be honoured here (most companies don't). So, plus lack of UK driving experience and no UK licence, your insurance could be £1000 or more even for a modest car. Plus the inconvenience and at times the danger of driving a LHD car in UK, esp when you have no passenger to help out.

Lastly, when you come to sell your US car in UK, it will fetch a lot less than a standard UK model of the same age and spec (expect about half).

It will take at least a year to build up credit record in UK. You will also score less because as US citizen you aren't eligible to go on the electoral register (voter registration), which is used to check up on your name and address.


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## nicoledanny (Mar 9, 2011)

Joppa said:


> You probably won't be liable for import duty and VAT as you've used it in the US and you are moving permanently to UK, but it's worth a check.
> What make and model is it? If the same model is sold in UK, getting most parts shouldn't be an issue but there are often specific parts for LHD car which need to be imported from US, with duty and tax on top of carriage.
> As I've said before, your no claims discount earned in US may not be honoured here (most companies don't). So, plus lack of UK driving experience and no UK licence, your insurance could be £1000 or more even for a modest car. Plus the inconvenience and at times the danger of driving a LHD car in UK, esp when you have no passenger to help out.
> 
> ...


I am not a US citizen, I am a German citizen.

I will have to have a car no matter what, so as far as insurance goes, I don't have a choice when it comes to paying that much. It's literally if I don't have a car, I don't have a job. Having a car was a requirement for each job I applied to, as a cps investigator. I can't bus myself around from client to client to the courthouse and I need a reliable car.


I do have a friend that has a UK insurance company that honored her no claims record, can't quite remember the name of it. I will contact different insurers and find one. If insurance is that much, I will have to deal with it. 
My car is a mazda6, automatic. 

I'll keep my eye out for decent (2005+) cars I can buy with cash, it'll all break down to money in the end. If I can sell my car here in America and buy a car like it (value wise) in the UK for no more than a couple thousand pounds more within days of arriving in England (before my job starts), I will do it.


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## nicoledanny (Mar 9, 2011)

While I'm at it, if I buy a car in the UK, what do I need to have lined up before arriving at the car lot? I've been finding my car for sale for good price on UK ebay lol, so I'm back on the sell my car here and buy a new one over there. When I bought my car here I didn't need to do anything, the car dealer already had it registered. He just checked to make sure I had car insurance and a license. I'll still be looking at a new car after I get my credit going, because I really want a nissan juke. I was originally going to buy a prius off my mother-in-law (due to high gas prices in the UK), but if I'm getting any kind of a new car, would do that in the UK.

When can I start going to driving school over there? I read we have to wait at least 6 months to get a license. Do I get a diesel or petrol car?


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## Joppa (Sep 7, 2009)

nicoledanny said:


> While I'm at it, if I buy a car in the UK, what do I need to have lined up before arriving at the car lot? I've been finding my car for sale for good price on UK ebay lol, so I'm back on the sell my car here and buy a new one over there. When I bought my car here I didn't need to do anything, the car dealer already had it registered. He just checked to make sure I had car insurance and a license. I'll still be looking at a new car after I get my credit going, because I really want a nissan juke. I was originally going to buy a prius off my mother-in-law (due to high gas prices in the UK), but if I'm getting any kind of a new car, would do that in the UK.
> 
> When can I start going to driving school over there? I read we have to wait at least 6 months to get a license. Do I get a diesel or petrol car?


As a German national, you can go on the electoral register, as you are eligible to vote in local and European elections (but not for UK parliament). Just contact the ER section of the local council and they will send you a form to complete.

Mazda6 auto (a very nice car btw) is in insurance group 23E, so quite high.
You don't need anything to choose a car, but when you come to pick it up, you need your driving licence, a utility bill bearing your address (or some other proof of address, such as council tax bill) and insurance certificate for the specific car you are buying. As I said, contact Direct Line and Aviva by phone for a quote, as they are known to insure recent arrivals. 
Nissan Juke has recently been released in UK (about 6 months ago), and is very popular with long wait for delivery, even though the European models are made in Sunderland, NE England. 
More than half the new cars sold here are diesel because of superior fuel economy. It depends really on your annual mileage. For less than 12k miles it probably isn't worth it, as diesel models often cost more and some petrol (gas) models can be very economical. Juke diesel comes with 1.5 litre Renault-sourced DCi engine, a bit noisy but performs well and quite frugal. New basic model (Visia) costs from around £14,000, around £1300 more than a petrol version.

You have to wait 6 months before you can get your provisional licence, which you need in order to take your driving tests - theory and practical. So give yourself 6 months after getting your provisional and before your US licence ceases to be valid in UK to pass, as you won't be then subject to learner-driver restrictions like having L plates, being accompanied by full licence holder and banned from motorway. You can get driving lessons as soon as you arrive (from around £25 an hour), but since you can't take the tests till you get your provisional licence, aim to be ready for tests (your instructor will tell you when) when you get one. Also try to pass your practical test in manual, as it enables you to drive all types of cars, and not restricted to automatics when you pass your test in one. While the car you eventually own may be automatic, renting a manual car on holiday is a lot cheaper throughout Europe and also broadens your choice.


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## nicoledanny (Mar 9, 2011)

Thank you so much for your help. I'm not super attached to my mazda6, I'm just using it to compare prices, and they seem to be exactly the same when I switch pounds to $$. I can wait for the Juke. There's no waiting list here in America, I've only seen it on the road once since October (?). Once! I live in Dallas... everyone has monster pick ups and huge suv's. I'll have to build up credit and such anyway, so I don't mind being on a waiting list if that's still necessary in a few years. Maybe something new will be out by then! I'm pretty fickle when it comes to cars lol. 

I guess I can get my husband to teach my on a manual right now. Or I can sign up for lessons. My U.S. driving test (in Alabama) was driving around a circle. Took maybe two minutes. I had had one hour of driving experience before then. Was just going to get a booklet so I could study for the written test, once they found out I was over 18, they said I could just take both tests. I walked out with my license less than an hour later. Crazy! Somehow I've never had a single fender bender and it's been 9 years. 

Alright, well thanks again! I'll see what other thing I can worry about soon enough lol.


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## guest789 (Apr 1, 2011)

I think that cars in uk are cheaper than in Germany. For 3,000 or 4,000 p you get reliable and enough comfortable used car. Like Mini, or if you like some bigger, you can get not so old Audi a 4, or Honda Accord for that money. Try to look into autotrader - uk.


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