Currently self-employed but about to start ltd company

katy123 · 31 May 2018 at 10:36PM

Hi

I'm currently self employed and have just purchase £400 worth of monitors for work. I've just incorporated my ltd company and will start trading in the ltd company around August time.

I'm aware that there is pre incorporation expenses that you can claim for under AIA. I'm a bit confused whether I should claim AIA whilst under self employed or treat it as an expense under the company. If done whilst i'm self-employed, my income tax (as basic rate taxpayer) will reduce by £80 (i.e. £400*20%). But how would it affect expenses when I start trading in the company given that I've already claimed AIA. Thanks.

Savvy_Sue · 31 May 2018 at 11:38PM

I'm a bit confused too, and wouldn't know the answer anyway, but ...

is your ltd company taking over what you're doing as self-employment, ie it's the same thing done in a different way?

And what does the accountant you'll be using for the ltd co suggest?

Pennywise · 1 June 2018 at 7:22AM

Upon incorporation you need to sell any assets transferred including stocks, equipment, goodwill, web domains etc to the limited company at market value. The price received is income in your sole trader accounts to set against the same items which you'll have claimed for as an expense in your sole trader accounts when you bought them. The amounts paid then become expenses in the limited company accounts. Your accountant is the person to give advice here as incorporation oif an existing business can be complicated and their are tax traps to avoid and also tax reliefs/elections which can be used.

bengalknights · 1 June 2018 at 10:29AM

Pennywise has it spot on here you have to sell your assets to your new company

katy123 · 4 June 2018 at 7:16PM

Pennywise wrote: »

Upon incorporation you need to sell any assets transferred including stocks, equipment, goodwill, web domains etc to the limited company at market value. The price received is income in your sole trader accounts to set against the same items which you'll have claimed for as an expense in your sole trader accounts when you bought them. The amounts paid then become expenses in the limited company accounts. Your accountant is the person to give advice here as incorporation oif an existing business can be complicated and their are tax traps to avoid and also tax reliefs/elections which can be used.

Thank you, apologies, I've been busy for the past few days. What if I do nothing, i.e. claim the AIA whilst self employed and just let the company use the monitors for free until I need to replace them, seems much simply.

Savvy_Sue · 5 June 2018 at 10:04PM

And I repeat:

Savvy_Sue wrote: »

And what does the accountant you'll be using for the ltd co suggest?

I have no idea whether what you're suggesting will work, or be a complete disaster. However, if a couple of people who I believe to be accountants, and who certainly know a good deal more than I do, suggest doing things in a particular way, I'd only disagree with them if I'd paid an accountant and they were suggesting a better or different way.

Reason being, you cannot 'rely' on the advice of posters here, because you do not know who they are and you do not have a contractual relationship with them. Pay an accountant and you can sue the pants off them if they give you duff advice.

Pennywise · 6 June 2018 at 5:52AM

katy123 wrote: »

Thank you, apologies, I've been busy for the past few days. What if I do nothing, i.e. claim the AIA whilst self employed and just let the company use the monitors for free until I need to replace them, seems much simply.

The tax laws don't allow you to do that. The sole trader business needs to be properly terminated and part of that process is accounting/adjusting for the value of stocks/assets.

Currently self-employed but about to start ltd company

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