Transfer of business?? -sole trader to company

apple

I've taken on a new client who is a anesthetist in a hospital so he has a paid job plus he does consultancy work for different hospitals. He has been registered as self-employed for the consultancy work 3 years. Since he is paying too much Income tax he wishes to incorporate his company (it has been incorporated already). Apart from a laptop and a car there are no other assets to transfer to his company. His profit from consultancy is £8000-£10000, and he hardly had any expenses. No outstanding debtors&creditors. How would you calculate the value of the business? Can he simple close his self-employed business and start working trough his company if he does not transfer any assets? would this still be a transfer? or simply closing down a business & starting a new one? thanks

paulstafford

Am I missing something here, but are you sure he will save enough tax/NI to make this worthwhile? £8k profits will result in about £4 of Class4 nic, plus the tax charged at his marginal ( presumably 40%) tax rate.

If he wants to take the money out of the company soon after earning it, by dividend, he is going to end up paying the same amount of tax except it will be a combination of corporation tax and income tax.

apple

not much can be done since his company has been incorporated already by himself. the profit will be much higher, was £8k in the last three year but he is expecting around £100k. Can he simpl close his self-employed business without transferring to his new company? is this actoually a transfer?

stevo5678

There probably isn't any goodwill (as it's all 'personal goodwill') so in essence he can just close it and start again, account for any pre Ltd balances through his DLA.