small business family loan

ZZaffy

My daughter has opened a small one person business. I have loaned/given her some money to help start the ball rolling.  She is not making very much money and just about ticking over which is fine because it is a lifestyle rather than trying to build an empire.  She has bought some equipment with the money that I have given her. For Inland Revenue-tax purposes, is it best that the equipment belongs to me?  Thank you

TonyMMM

Is she a sole trader or a Ltd co ? Does she have an accountant ?

Is the money a gift to her, or a loan to the business, and how has it ben documented ?

Presumably she will be wanting to include the cost of the equipment as an expense to offset against income on her tax return ?

ZZaffy

Firstly, thank you for your immediate response.
Sole Trader.  Not limited. 
She may use an accountant if we can't get our head around it.
But strange to use an accountant when the business is earning not much more than what is going out.
Yes, presumably she will be wanting to include the cost of the equipment to offset against income on her tax return but there is little income to offset against so was wondering where the advantage will be.

TonyMMM

Even as a sole trader, she should try and keep accounts that separate her business income and expenses from her own money . I would suggest that you clearly record the money as a loan to her (as the business), she can then record the purchase of the equipment as a business expense.

Repayment of the loan to you , over time, could then also be a business  expense to set against her income  once, hopefully, it starts to come in.

She should also be looking around, perhaps with the local council, for support & advice, and possibly money, that may be available aimed at start-up businesses.

Nearlyold

TonyMMM said:

Even as a sole trader, she should try and keep accounts that separate her business income and expenses from her own money . I would suggest that you clearly record the money as a loan to her (as the business), she can then record the purchase of the equipment as a business expense.

Repayment of the loan to you , over time, could then also be a business  expense to set against her income  once, hopefully, it starts to come in.

She should also be looking around, perhaps with the local council, for support & advice, and possibly money, that may be available aimed at start-up businesses.

Sorry that's not quite correct - Repayments of the capital element of the loan would not count as a business expense - only the interest element (if any in this case) would be tax deductible.

TripleH

It depends, how much is the equipment?

Is it lots of little items or is it for example a computer?

Was the money used to buy stock?

ZZaffy

TripleH said:

It depends, how much is the equipment?

Is it lots of little items or is it for example a computer?

Was the money used to buy stock?

A tractor and a golf buggy are amongst the larger items. Hay is the only stock.
Thank you for your interest.

TripleH

If you own them then she doesn't benefit from 'capital allowances' (deductions allowed to reduce the tax she pays).

However if she rentscthem off of you then the rent she pays is allowable but you'd be subject to tax on the income.

ZZaffy

Thank you.  Tax is ridiculously and unnecessarily complicated.  Do this, but if it's this do that, but if it's that do this and double it, however - etc.

[Deleted User]

Which is why an accountant is a good move, if the business is a simple/hobby/lifestyle one the accountants fees won't that be high and provides peace of mind.

ZZaffy

[Deleted User] said:

Which is why an accountant is a good move, if the business is a simple/hobby/lifestyle one the accountants fees won't that be high and provides peace of mind.

Yes, you are right.
Your tag line when it comes to tax should be:
"First, take responsibility, apart from when it comes to tax, in which case hand all responsibility to an accountant."