Pre-trading expenditure deductions

[xchaotic]

Hi all.

My account advised me to include my computer training & exams (Cisco CCNP) that I have taken before setting up a Ltd as a pre-trading expenditure deductions.
Is it typical to do so?
All I have on this is here: Specific deductions: pre-trading expenditure: relief
But I'm not certain haw far back can this - i.e. obviously I wouldn't claim my play-doh in nursery, but how about a post-grad studies etc?

Thanks.

[northernladuk]

There are three separate issues here...

1) Putting training through the LTD
I was surprised to see that one guy asked about an acountancy course and there was a comment that this might not be allowed due to it giving you other benefits not just for work which I thought was very tight. As it is not part of your core offering maybe there is some ambiguity here but I am sure training on something you then later bill for must be allowable. It seemed to be agreed that if it was it MUST be paid for from the LTD account to be totally transparent. I don't know about training in CCNP if you are a windows specialist then I don't know either. Technically you are not using it for your business but how do you skill up?

2) Claiming training (or anything) that has been paid for BEFORE formation of LTD
This again has been asked and there didn't seem to be agreement on this. Some people said no other say yes. Hardware you can 'sell' back to the company so get it that way but don't know the answer to this.

3) Training not directly related to business
No. You post grad, evening courses etc are for your benefit and your career and are not wholly and exclusively for business use so cannot be claimed. Take the accountant course in the example above. It is needed for you to run a business so you would think it would but some said no as you can do your own tax returns or something daft. A course in woodwork to build a desk for your office is not allowable.

I would be interested to see what people say but that is a summary of what I remember from past posts.

[rmmc]

I would think that you would have difficulty in claiming the incurred expenses prior to set up of a limited company. Particularly the expenses incurred by third party when the company or trade did not exist.

However, individual can invoice the cost incurred after the incorporation of the company, then it should be ok.

The link you posted it says clearly
"*a company has paid charges on income prior to the commencement of the trade, and
*such charges are paid wholly and exclusively for the purpose of the trade,"

This is my interpretation, after incorporation, any expenses which are wholly and exclusively for the purpose of the business incurred prior to the commencement of the trade are allowable. And be treated as incurred on the first day of the trade.

[northernladuk]

I would think that you would have difficulty in claiming the incurred expenses prior to set up of a limited company. Particularly the expenses incurred by third party when the company or trade did not exist.

However, individual can invoice the cost incurred after the incorporation of the company, then it should be ok.

The link you posted it says clearly
"*a company has paid charges on income prior to the commencement of the trade, and
*such charges are paid wholly and exclusively for the purpose of the trade,"

This is my interpretation, after incorporation, any expenses which are wholly and exclusively for the purpose of the business incurred prior to the commencement of the trade are allowable. And be treated as incurred on the first day of the trade.

Would there be a time limit on this? If you did the course 8 months ago it could be argued you never envisaged setting a business up at that time so was never going to be for the purpose of the business?

[rmmc]

Would there be a time limit on this? If you did the course 8 months ago it could be argued you never envisaged setting a business up at that time so was never going to be for the purpose of the business?

There is a 7 years limit for the pre trading business expenses incurred prior to start trading.

[VectraMan]

I put the cost of a cheap laptop (and reclaimed the VAT) through the company that I'd bought 2 months before starting the company. The intention was always that it would be used for the work I wanted to do whilst staying away, and I used it to demo some stuff to my first proper client, so it was genuinely for business use (plus it was so crap I didn't want to use it at home).

[xchaotic]

Thanks for all the replies, very handy.
I think I'll claim my laptop then as I still use for my business now.
However it leads me into thinking that maybe UK Ltd is not such a great approach for running IT consultancy - over the years I have had very little claimable expenses (I'd say 10-20% of the income).
I am on a flat rate VAT so that works in my favour if I'm working with UK clients, but still CGT on most of my income + dividends or PAYE liks like a lot of % to pay, compared to some other EU countries, or maybe I'm just greedy (as Gekko is supposedly saying in the new "Wall Street": 'greed is not only good it's also legal')

[riffpie]

I put the cost of a cheap laptop (and reclaimed the VAT) through the company that I'd bought 2 months before starting the company. The intention was always that it would be used for the work I wanted to do whilst staying away, and I used it to demo some stuff to my first proper client, so it was genuinely for business use (plus it was so crap I didn't want to use it at home).

My accountant informed me that I can effectively sell one personal computer (as in "one I own") to my Ltd, and that if it was less than 6 months old, I can sell it at what I paid for it. Anything over 6 months, I can sell at "market value".