Selling sole trador items under limited company.

[kia2094]

I’m a director of a new limited company, and this is my first post, please go easy on me .

I’m trying to learn more and understand ins and out of how transfer of items from sole trader to limited company works.

I have a business-related specific camera. I have a customer that wants to buy it for 5000 GBP. As a sole trader currently, I am under higher rate bracket.

Is it possible to give it to my newly formed company and sell it under that? I want to get taxed for the item under cooperate ta rather than sole trader higher tax bracket.



my questions are:

A) How much can I charge my limited company for the camera? Do I have to pay income tax on the amount I charge my company? This part I don’t understand, I mean why not charge my company lower or higher?
Let’s say the similar camera sells for 4500 GBP on eBay.
Also, I do understand the item sold is not AIA eligible, but only can be added to the main pool.

B) So, let’s say I sell it today, can I mark the item sold to my limited company today as well? If that is the case, then why not sell all your personal belongings like that to save on tax by getting paid taxed free, and only pay CT.




Many thanks

[NotAllThere]

You can sell the camera to your company at any price you like. But if you sell it at £10000 or £10, and it's available retail of £4500, and you're investigated, HMRC will probably notice that you sold it to the company for an artificially high/low price in order to avoid tax. So you'll get a tax bill, with interest and penalties.

Anything your company buys cannot have (with a few exceptions) any component of personal use, without attracting a BIK charge.

When you operate under ltd, it is important to understand that the company is legally a separate person. Treat it as such and you won't go far wrong.

[Lance]

Selling sole trador items under limited company.

You could sell the camera, at a fair value, you your company but not pay yourself immediately. It could become a positive balance in your director loan account.

If you weren’t a sole trader this would be simple with no tax implications. But as a sole trader if you make profit on the camera then you’ll have some tax to pay.

I think you could use it as a capital investment though. That way there is no profit until you sell or close the company, or otherwise realise the capital value (share buy back etc.)

But as pointed out, it’s a separate legal entity so treat as such. Separate bank. Separate accounting.
And get an accountant.


As for selling all your personal items. As NAT says there will be a benefit in kind tax to pay so this will not work. And also your company would own all these things, not you. So if the company went bust you would lose all those things.

[Patrick@Intouch]

Is this your personal camera? If it is then you can simply sell the camera to the person that wants it without there being any tax implications.

One-off sales of personal assets where those assets are not held for investment purposes does not constitute a trade and will not give rise to capital gains tax charge.

There is no need to complicate this by selling the asset to your company and then on to the individual.

[kia2094]

Thank you all for the kind and quick reply, ok let me clarify further:

Let’s say:

1- All products are medical grade, It is not for personal use.

2- I bought it from back home, so I didn’t pay or claim any expense as a sole trader in UK for it.


Let’s say this is my sale this year:

6000 GBP: Income as a service I provided for other clinics, more in form of repairs, paid into my personal bank account.
5000 GBP: My used medical equipment, paid into my personal bank account.
5000 GBP: My used medical equipment, paid into my personal bank account.
4000 GBP: My used medical equipment, not sold yet.


-First question: The 6K income is declared as income tax? That’s after removing costs of the repair from it.

-Second question: Do I pay CGT or income tax on the 10k sale of the medical equipment, paid into my personal bank account?
Right now, Im thinking to declare income tax for 10K income, with no expenses.


-Third question: Best way to sell the 4K medical equipment that belongs to me personally?

[northernladuk]

1. Profitering from Covid.. you horrible little person...

2. You are struggling with finances and taxes? Get an accoutnant.

[kia2094]

1. Profitering from Covid.. you horrible little person...

2. You are struggling with finances and taxes? Get an accoutnant.

Its an example to make the Q&A straight forward and understand the principal, SMD laugh


May be its time to stop working from the local cafe/pub, its clearly affecting your judgement.



But thank you for taking the time to reply.



Much Love,

[eek]

You need an accountant so pick a few from the recommendations thread above this one, phone them up and ask your questions then pick one you like.

[fidot]

If Ltd is vat registered, you will have to charge vat on the sale, but you won't be able to claim it back on the purchase from yourself