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Where Taxpayers and Advisers Meet

Sole trader to Limited Company

DrakeHarold
Posts:3
Joined:Fri Aug 13, 2021 8:43 am
Sole trader to Limited Company

Postby DrakeHarold » Tue Aug 17, 2021 4:47 am

I have a client who wants to set up a product design business, initially working alongside his full time employment (he is happy there is no conflict of interest) and then going full time on his own. He is a higher rate tax payer

He has asked if it might be worthwhile initially to trade as a sole trader because he is likely to make a loss in his first few months up until 5th April 2015 then revenues are likely to start coming in at which point he would like to incorporate into a limited company. So he is thinking about setting initial losses against his other income to reduce tax this year.

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Sole trader to Limited Company

Postby wamstax » Tue Aug 17, 2021 7:58 am

Where are you copying your posts from.? You cannot be serious Christmas joys and cheer in your other post in August.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Sole trader to Limited Company

Postby robbob » Tue Aug 17, 2021 8:16 am

You cannot be serious Christmas joys and cheer in your other post in August.
Must admit i had a couple of "late" Xmas parties last month one of which included the tree xmas music and other standard xmas fare excluding the eggnog thankfully - these are strange times indeed !!

To the op seing as you asked this should be fine and makes sense - however this is subject to the caveats outlined in HS227

https://www.gov.uk/government/publications/losses-hs227-self-assessment-helpsheet/hs227-losses-2021

Specific main no no's in this regard.

do not run your trade commercially and for profit, for example if your trade is run as a hobby


The amount of loss relief you claim against income or capital gains may be restricted or limited for example if you:

worked for less than 10 hours a week on average on commercial activities of the trade
are a limited partner or a member of a limited liability partnership
have a trade which is carried on wholly overseas
have claimed certain capital allowances,
have income from oil extraction activities or oil rights

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Sole trader to Limited Company

Postby robbob » Tue Aug 17, 2021 8:24 am

Oops nearly forgot - merry christmas !!!! Ho Ho Ho


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