You can claim capital allowances for the cost of the equipment used
within your business.
However if you then decide to incorporate your business things can get complicated.
Here’s our tip to avoid losing out.
When you transfer your business to a limited company the legal position is that you are selling your business to your company. Because of this your equipment is considered sold, at the market value price, and then re-bought by your new business for the same price. Putting a value on equipment is not always easy and can sometimes lead to a loss of capital allowances.
100% Capital Allowances under the Annual Investment Allowance are not available in the last year of trading, this can be onerous on the business in the year before it is incorporated. There may also be balancing charges arising from the market valuation of the equipment, meaning tax relief previously given is clawed back and future allowances are spread over a number of years at 18% per annum.
This is a complex area and specific to each business and the nature of your capital items. If you’re thinking of incorporating your business speak to a qualified accountant before you do so.
Contact Carole Jordan on 01273 882200, or email us at firstname.lastname@example.org for a full and comprehensive service to help you incorporate painlessly.
All details above were correct at the time of publishing - for more up to date information please
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