I just had a couple questions regarding incorporating and capital allowances.
I have a client who used to do photography as a hobby before they recently incorporated into a ltd company. They have had bought quite a lot of photography equipment over time (cameras, portable studios etc totaling £10k or so) purchased before incorporation.
1. On incorporating, how far back can you go when including these purchases as assets into the company? These assets will be bought into the ltd company current market value and credited against the director's loan account.
Is the limited company involved in photography? Will this equipment be used in the business? Purely business, or part used for personal activities?
Assuming the equipment is related to the business, yes to current market value, and capital allowances would be at the current 18% (less any personal usage disallowance you might feel is necessary)
I believe you can go back 7 years. Here's a link for you to review:
Hi Michelle,
Thank you for your reply and link.
Please could you clarify what you meant by the personal usage element? I didn't think that was relevant to capital allowances but I may be wrong.
Kishan
If there was significant personal use, I would disallow some WDA, even in a company. Either that, or I would bring the cost in at a reduced rate... But that's just me. I'd be trying to avoid comeback and messing around with BIK. Doesn't anyone else do that? I think I picked it up from an old boss. :$
-- Edited by FoxAccountancyServices on Monday 13th of January 2014 06:09:34 PM
Scrap everything I have said in my first post. My old boss had a way of doing things, to avoid making a meal of trivial amounts, and whilst his way was never contested in investigation, its not the written way, and that's what I should be telling you, sorry for causing confusion. (I think he did it this way as the owner directors didn't have PAYE schemes, as they were paid under the reporting limit - so he was just trying to make sure there was some sort of reduced tax relief. I had another boss do this too, actually, so I thought it was a fair norm, but there you go)
So...
The director should sell the items to the company with an official invoice. The items them become property of the Limited Company.
The company can then claim 100% AIA
If the director uses the equipment personally, then a P11D should be completed each year.
Can you claim AIA on pre owned assets, I had in my mind that they had to have been bought new specifically for the business otherwise it was just wda to claim...could easily be wrong though.
Hi guys... I put 18% on the first post, as that is how understood it, too.. and it was questioned... so I went online and could only find that rule for sole traders. So, I assumed I had confused myself with the different treatments for Ltd & ST.
I actually believed the non AIA was down to connected person as much as pre-ownership. Perhaps I should stop second guessing myself!
On a side note, I spoke to my old boss this morning, about the private usage, and he totally advocated it as a fair work around in compensation for not doing a P11D :$ He trained at EY, so I have never questioned his actions.. maybe it was different in days gone by. He's an old buggar now, for sure! It makes sense to me to put a disallowance through, to be honest, instead of faffing around with a P11D on something trivial. But hey ho, I have told my boss he was a very naughty man for getting me in trouble! LOL
I was in a charity shop the other day and saw the dvd so I've ordered my sixteen year old daughter to watch it with me...she didn't seem keen though...
