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Where Taxpayers and Advisers Meet

soletrader to ltd

dickiebranson
Posts: 1
Joined: Fri Nov 09, 2018 8:06 pm

soletrader to ltd

Postby dickiebranson » Fri Nov 09, 2018 8:15 pm

hi people
I've a quick question would love some advice, I've recently started working for myself as a soletrader since April. I'm looking at buying a new van thru AIA.. but I'm also looking at changing from a soletrader to a ltd company in new year..what happens to the van can it be given to ltd company.
how do i account for the van
thanks in. advance
Richie

RMC
Posts: 431
Joined: Wed Aug 06, 2008 3:35 pm

Re: soletrader to ltd

Postby RMC » Sun Nov 18, 2018 5:51 pm

The van should be transferred to the company at its market value, with corresponding credit in your Director’s Loan Account, viz. the Ltd pays you its full market value.

For income tax / corporation tax purposes probably best that you and the company make an election to treat the van as transferred at its tax-written value, which after the AIA claim will be NIL.

robbob
Posts: 2764
Joined: Wed Aug 06, 2008 4:01 pm

Re: soletrader to ltd

Postby robbob » Mon Nov 19, 2018 11:34 am

For income tax / corporation tax purposes probably best that you and the company make an election to treat the van as transferred at its tax-written value, which after the AIA claim will be NIL.
Note you cannot claim AIA if this is your final accounting period before the transition to limited company - note if your year end was 5/4/2019 and you had one day of trade on 6/4/2019 (cessation date) and commenced sole trader 7/4/2019 that could get around that issue if van was bought 5/4/18 or earlier.


https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23084
General exclusion 1: in the chargeable period in which the qualifying activity is permanently discontinued

RMC
Posts: 431
Joined: Wed Aug 06, 2008 3:35 pm

Re: soletrader to ltd

Postby RMC » Mon Nov 19, 2018 1:29 pm

So, assuming that the accounting year-end is 5 April, maybe best to buy the van (& similar) before 5.4.2019 and incorporate say on 7.4.2019?

robbob
Posts: 2764
Joined: Wed Aug 06, 2008 4:01 pm

Re: soletrader to ltd

Postby robbob » Mon Nov 19, 2018 2:27 pm

So, assuming that the accounting year-end is 5 April, maybe best to buy the van (& similar) before 5.4.2019 and incorporate say on 7.4.2019?
Potentially yes, it will completely depend upon the profits / projected profits with regard to the two years and other income details, but it's definitely an option.
Eg if AIA would take income below personal allowance you probably wouldn't want to claim AIA, one may want to bag 6-8k ish of sole trader profit after 5th april 19 so that income is neither subject to dividend tax or class 4 NI, that may affect how you choose to claim CA's. Plenty of options available.


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