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Where Taxpayers and Advisers Meet

Starting a new Company and Employed

simon789
Posts:2
Joined:Sat Nov 20, 2010 5:24 pm
Starting a new Company and Employed

Postby simon789 » Sat Oct 03, 2020 3:43 pm

I’m starting a company with my sons and I’m already employed. I’m putting all of the money in.

I plan to buy some Scaffolding, rent a yard and purchase a vehicle.
Can I offset this investment against my tax bill for my employment for this year and get a refund.? Or is it completely separate?
Any advise would be appreciated.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Starting a new Company and Employed

Postby bd6759 » Sat Oct 03, 2020 6:21 pm

If you are starting a company, then all these costs will be the company’s costs, not yours. All you are going is lending the company money to fund the purchases.

You cannot set these costs against your income.

Ray Coman
Posts:24
Joined:Tue Oct 13, 2009 10:41 am
Location:The Gallery, 14 Upland Road, London, SE22 9EE
Contact:

Re: Starting a new Company and Employed

Postby Ray Coman » Sat Oct 03, 2020 7:40 pm

Here are some ideas for you:

1) If you set the business up as self-employed you would be able to deduct the loss against your employment earnings of the same tax. However, a company is seen as a separate entity (even though you are the shareholder/director.) Therefore the loss cannot be offset as the previous poster pointed out.
2) If you have borrowed money to buy the scaffold, the interest could be seta gains your total income. I have written about this here: https://comanandco.co.uk/tax-relief-on-loans-to-property-investment-company
3) It is possible to deduct expenditure incurred in the seven years before you started trading as expenses of day one. This is referred to as pre-trading expenditure. therefore, you could reset the accounting period to the month immediately before you started trading and file the period from incorporation to that shortened accounting period as dormant.
4) If the purchase of the equipment makes a loss, that loss can be carried forward and set against the next available trading profits of the business.
Raphael Coman, ACCA, CTA
Tax Accountant

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Starting a new Company and Employed

Postby bd6759 » Sat Oct 03, 2020 11:00 pm

You are forgetting that the the scaffolding and vans are capital costs and cannot create a loss.


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