Please bear with me on this one. If I am right in thinking, if I carry profit over a tax year, that prfit gets taxed by CT. If I don't make a profit, there is no CT to pay. If, come the end of the tax year, I have £100k in the company, can I buy something like a gite, in the company name, and use this as a business asset, with the rental for it obviously going to the company? I would have to change the use of the company to a dual use I guess, but would this be considered ok? Now, in 3 years, could I transfer these gites into a pension fund i.e. the gites themselves become the pension, and I can backtrack mine, and my wifes, allowances for pension (£50k a year * 2), or can I just put the rental income into the pensions?
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Change of business, buying assets
Collapse
X
-
-
Originally posted by Zoiderman View PostPlease bear with me on this one. If I am right in thinking, if I carry profit over a tax year, that prfit gets taxed by CT. If I don't make a profit, there is no CT to pay. If, come the end of the tax year, I have £100k in the company, can I buy something like a gite, in the company name, and use this as a business asset, with the rental for it obviously going to the company? I would have to change the use of the company to a dual use I guess, but would this be considered ok? Now, in 3 years, could I transfer these gites into a pension fund i.e. the gites themselves become the pension, and I can backtrack mine, and my wifes, allowances for pension (£50k a year * 2), or can I just put the rental income into the pensions? -
Originally posted by JamJarST View PostProfit always gets taxed in the year you make it whether you carry cash over or not. If you make a £100k this year you will have to pay £20k tax and have £80k in the bank. If you make nothing in year 2 you carry over £80k with not tax liability (ignore interest in my simple example). A gite would not reduce your profit, it would be an asset capitalised, you could depreciate it but no way could you write off the whole value in year 1.Comment
-
Originally posted by JamJarST View PostIf you make a £100k this year you will have to pay £20k tax and have £80k in the bank. If you make nothing in year 2 you carry over £80k with not tax liability (ignore interest in my simple example).
HM Revenue & Customs: Making a loss and Corporation TaxComment
-
Originally posted by Zoiderman View PostOK, not too bright in the accountancy department, but would you not be able to spend say 80k of the 100k on a gite, and that only leaves 20k profit to be taxed on? As now there's an asset you have bought?
I am also not sure what the impact of running to different businesses in the same company would be, i.e. IT services and a holiday rental business.Comment
-
Originally posted by contractoralan View PostIn year 2, your operating expenses(accountant fee, insurance etc) will lead to a loss that can be offset against previous year's profit and get a refund of tax paid or you can carry the loss forward to offset in the next years.
HM Revenue & Customs: Making a loss and Corporation TaxComment
-
Originally posted by JamJarST View PostNo you would still have 100k profit. An asset is capitalised and depreciated over its useful life, the depreciation does affect profit but the allowable rate of depreciation on a building would be quite low (not sure how low). As a businessman, you really should look into learning the basics of finance and the likes of balance sheets.
I am also not sure what the impact of running to different businesses in the same company would be, i.e. IT services and a holiday rental business.
Thanks for the adviceComment
-
Originally posted by Zoiderman View Postwell I guess the issue is that I am not a businessman, I am an it contractor who happens to use a ltd company as a vehicle. I guess I need to research this a little more.
Thanks for the adviceComment
-
Originally posted by JamJarST View PostYou are a businessman now and this is a great opportunity for you to expand your horizons. The fact that you are already looking at investment opportunities and diversification means you aren't "just" an IT contractor.
A lot of contractors have been wondering how to invest/spend surplus cash in the company. Property can be bought in the company and rental attributed to profits, but the purchase price is not a cost that can be taken off the profit figure.
AFAIK the property then remains a company asset and accounted for as such. You can leave it in there forever and use the rental income to pay yourself dividends in your old age (or sooner...).
One thing I'm not sure of is whether you can transfer the property to your pension from your Ltd.Comment
-
Originally posted by JamJarST View PostYou are a businessman now and this is a great opportunity for you to expand your horizons. The fact that you are already looking at investment opportunities and diversification means you aren't "just" an IT contractor.
One of the main reasons I became a contractor was to have opportunity to run my own business and not just have a vehicle for contracting.
Ultimately I want to be in a position where I have a product that I can sell rather than just providing a service so I am using personal time (+ bench time) and also some money from the business and investing in product development. Another area I am looking to put some of the company money towards is commodities (gold, platinum etc.) but I’m waiting until the war chest has got to a reasonable size before going into that.Comment
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Comment