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Further questions about incorporation

I have a few more questions regarding incorporation of my sole trader mechanic client if anyone can help at all.

1.  Is it feasible for him to keep his garage in his own name and rent it out to the company?  He thinks commercial rent would be around £500 per week - obviously he would need to declare this via self assessment?

2.  On the above subject, is there any benefit to sharing the rental income with his (currently unemployed) wife - apart I suppose from the benefit of the allowance?

3.  He has around £50k of equipment/stock in his garage - is this OK to transfer to the new company (debit assets, credit DLA) or would HMRC need to be aware of this amount?

4.  He thinks goodwill would be around £30k - again OK to transfer or need HMRC's involvement?

5.  Final query - sickness insurance - can this be paid by the company (around £160 per month) as he says it's vital to his business (I guess he would say that) but, if it was, I guess any payout would be taxable income to the company?

Any help gratefully received!

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By zebaa
18th Jan 2012 21:00

1 to 5

1 Yes.

2 You got it in the latter part of your question.

3 Yes ( and, no, to HMRC unless he is making a profit ( for which think SA)).

4 Minefield.

5 Depends on who the insurance pays. He will count as self employed though, so most IPP will be invalid.

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18th Jan 2012 22:09

Most answered but beware
I did not see your First thread.

Re pt 3, by crediting DLA the director is receiving consideration for assets. Thus balancing charges likely in the cap allowance pools.

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19th Jan 2012 11:16

@cparker87

cparker87 wrote:
I did not see your First thread. Re pt 3, by crediting DLA the director is receiving consideration for assets. Thus balancing charges likely in the cap allowance pools.

... would you be able to explain a bit further please?

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19th Jan 2012 21:41

Whoa - are you sure you are up to this?
Excuse me for saying this Jaybee61 but that's a lot of important information you are asking for help with, and I can see there are a number of questions you havent asked which you may not know the answer to based on what you have asked already.

I would hate for you to make a mistake with any of the tax or legal implications of an incorporation, so if you want to chat about this (we deal with lots of incorporations for some reason!) and borrow some templates please pm me your number.

Cheers

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