Sale of Assets and capital allowances - sole trader to ltd company

dantray Registered Posts: 72 Regular contributor ⭐

Forgive me if this obvious but my brain clocked off an hour ago!

A sole trader client has P&M with a collective NBV of around £750 which has been bought over the years and wants to transfer these to his newly incorporated company. No problem here.

In May 2011 he bought a Van for business use only and also wants to transfer this to the company.

My question is can the client claim capital allowances on the van through 2011/12 self assessment, before selling the van to the company at current market value, for the company to the claim capital allowances on this transaction also?

Or would this fall under a "connected persons" type clause and be disallowed?

If it is not allowed do I have the option of advising the client to put through either sole tradership or limited company, depending on the potential tax saving?

Thanks in advance


  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    The client can claim through Sole Trader and then transfer to Limited at true market value, however if claiming AIA in sole trader then sale proceeds to Ltd will reduce amount claimable. You should also be aware that AIA is not allowable when director introduces assets to Ltd. All depends on who purchase invoice is to and what would be best for tax for client.
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