Capital Expenditure for a new business


I have a sole trader with 1 small business, looking to set up a second new business, which will not have revenue till 2015/16

He is querying whether it is best to buy capital expenditure for the new business in this tax year or next – he is looking to spend around £5,000 on capital expenditure – a number of smaller items, rather than one capital item.

Looking at his figures for the 2014/15 tax year, he will have around £3,000 taxable income (after personal allowances), from his first business –this does not include any revenue from the new business.

My question is:
If he buys capital items in 2014/15 for his new business, but doesn’t earn any revenue, until 2015/16, can we claim these capital items in the year of purchase under the new business name, and then transfer these losses across to his other businesses - therefore reducing his current tax liability from £3k to £0.
I appreciate that AIA cannot be brought forward, but if he split the costs across 2014.15 and 2015.16 so that he spent £3k this year, and the balance in 2015.16 this would be most tax efficient up-front? Assuming that you can claim for expenses/capital allowances before any revenue received?

Is this feasible and have I missed any other options?

He is not cash basis.

Thanks very much, as ever, for your help!


  • paulstafford
    paulstafford Registered Posts: 126 ? ? ?
    Are you factoring in class 4 ni when you state his taxable income is currently £3k?
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