Selling Capital Allowences from Self Employed to Ltd Buisness

[embo]

I transfered 1ks worth of capital assets to my ltd company (or rather the accountant did it) before closing the self employed buisness.

As they were several years old, have I as the self employed buisness owner incurred tax in doing so? I presume so but according to the HMRCs definition of capital gains tax its not that as the items are several years down the depreciation curve (hence the 1k).

Being an idiot I completely forgot about this but have to fill in SA form.

Any help would be appreciated.

[tractor]

...

I transfered 1ks worth of capital assets to my ltd company (or rather the accountant did it) before closing the self employed buisness.

As they were several years old, have I as the self employed buisness owner incurred tax in doing so? I presume so but according to the HMRCs definition of capital gains tax its not that as the items are several years down the depreciation curve (hence the 1k).

Being an idiot I completely forgot about this but have to fill in SA form.

Any help would be appreciated.

Follow the money, that's what the Revenue will do. Did you take the 1k from your Ltd personally or did the money go into your SE business account? Was your SE business closed properly or did you just stop trading with it? Does HMRC know that you have stopped trading with it? If you closed it properly, then it will already be included in your profit/loss for the last period providd that you invoiced your Ltd properly.

If you paid the money from your Ltd to your personal account to settle it then I suspect that you have to include it as income for the period in question. From your query, I rather suspect that this is the case.

IANAA and I am sure one of our regular professionals will be along shortly to fill in any gaps or put us all right

[embo]

Im sure this must be taxable so want to do the right thing. Just so annoyed with myself for not remmebering to ask the account yesturday.

Did you take the 1k from your Ltd personally or did the money go into your SE business account?
Transfered it into my personal account becuase I had closed the seperate account for self employed monies a couple of weeks earlier. Now you mention it, that was probably not the best thing todo...

Was your SE business closed properly or did you just stop trading with it?
Does HMRC know that you have stopped trading with it?
I rang up the HMRC and told them I was closing/stopping self employement as I had a LTD. IIRC I filled out a online form too but I dont remmeber this detailing disposal of assets.

If you paid the money from your Ltd to your personal account to settle it then I suspect that you have to include it as income for the period in question. From your query, I rather suspect that this is the case.
Even if it was to my other account that I used for the self employed work, how would that work when I closed down the buisness/account...etc. I suspect youre correct though, I cant see this money not incurring some sort of tax...

Thanks for your help.

[Jessica@WhiteFieldTax]

The key to this is (a) was any election done to transfer assets over at tax WDV. I forget the section number off the top of my head, and can't easily access it from my iPad.

If it was, then there would be no tax effect on sole trader cessation

(b) if no election done, then the answer depends on the capital allowance pool of old SE business, and the difference between that and the £1,000 will created a balancing charge or balancing allowance.

I get the impression you were doing your own accounts for self employment? In which case you will have details of your CA pool?

[embo]

"The key to this is (a) was any election done to transfer assets over at tax WDV"
Yes I worked out the pool value and that was the amount transferred (to the penny).

"I get the impression you were doing your own accounts for self employment? In which case you will have details of your CA pool?"
Yes I have the amounts for the years the SE was operating. I/my accountant used that spreadsheet when transferring the assets.

The slightly alarming question this does raise; it seems like I should have 'written off the assets' when closing self employment. At the time I asked what I needed to the HMRC and they didnt mention that. I aligned it with the end of the tax year (april 2014) so I presume I need to hunt on the HMRC website for info to fill in the last self assesment entry relating to the the closure (rather than recalculating the pool...etc)

I get the impression you were doing your own accounts for self employment?

Whatever gives you that idea (same reason why I let professionals handle my ltd company accounts!)

Thanks Jessica.

[Jessica@WhiteFieldTax]

If, as I think you are saying, you transferred the assets at pool value (aka tax WDV), then you've got nothing else to worry about.

Also, sanity check. £1,000 of assets, £400 or so of tax? If you got it wrong, and if HMRC picked it up, then mea cupla, it's not the size of error that's going to bring HMRCs wrath down on you (and before NLUK gets on his high horse, that's not me saying accuracy isn't important, I am saying that some perspective is needed).

[embo]

I presume that only a balancing charge arises when the assets are sold at more than the WDV. The reason for my confusion on this is that in this HMRC example:

https://www.gov.uk/government/upload...3611/hs252.pdf
The guy sells all his equipment and incurrs a balancing charge when he sells his equipment.

But on the SA form, it states 'Total balancing charges - where you have disposed of items for more than their value:'

Maybe Ive got WDV wrong. I assume the definition to be the current pool value of the assets I have claimed capital allowances on.

[Jessica@WhiteFieldTax]

Yes, WDV is the unclaimed pool i.e. total spent on assets less allowances claimed.

If you've sold assets for WDV then there is no further adjustment needed.

Assumption that the WDV isn't wildly out from MV (by £000s)

[embo]

Thanks again