Tried a general google seach on this and foudn a long discussion on 'pistonheads' that had lots of varied views
Limited company, works from director's home (me). Can it buy a painting as an investment and store it at said home (but not wrapped up in the attic, but on the wall)?
I guess this is a bit of a grey area. Going ahead and buying it 'personally' but might transfer it across to business dependent on responses.
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The company is free to spend it's money how it wishes. For example, it could use some of its cash for professional advice :)
There are undoubtedly tax consequences to such a transaction though.
It's not a grey area at all.
The good news is, yes, you can.
The bad news is, there's no deduction from trading profits for investment art. So, if you're looking for a Government subsidy for your purchase, forget it.
There's case law on this: Norfolk v Chance
Are you suggesting that a limited company cannot buy a painting? That is utter hogwash, and I think you know it.
>Are you suggesting that a limited company cannot buy a painting? That is utter hogwash, and I think you know it.
I'm a mind reader which allows me access into the mind of the OP. I have to say, it's pretty roomy in there!
Basics of company taxation:
All income is taxable. You can deduct expenditure that is “wholly and exclusively” for the purposes of the business to arrive at the taxable profit.
Whilst there are a few places where the wholly and exclusively rule is little elastic, it’s pretty difficult to make a case that artwork hung on the wall of your home is for the purpose of your business.
It turns out that the OP's company's businesses is interior design and the director who opens his home to customers and the painting hangs as part of a his showroom :-)
Does he have a showroom, where the painting is hung? or is he opening his home, where the painting is hung? It can't be both, and the two have different consequences.
Rockall may be in point. And one would need to consider whether it was more akin to his yachts, or his clocks.
I was playing devils advocate - i doubt very much that the OP's business is one of interior design. I was just making the point that it's easy to jump on the bandwagon, or rather shoot first and ask questions later.
A home can incorporate a showroom - if there's use of it for domestic purposes the question then is whether there's duality of use or whether any domestic use is incidental. But I take your point.
I cannot see any connection to the business. This expenditure should be treated in the same way as any other money taken out the company by the Director/shareholder. So either payroll or book to the Director loan account.
The company can pay for a painting to be hung on the wall of the director's property, and I see no reason why it should not either (a) qualify as a revenue expense or (b) qualify for AIA, depending on who will own the painting after it's purchase.
Good to know my Utrillo " La Lapin Agile" , specially imported from the US via E Bay for all of £16.67 ,including customs clearance , and now on the mantlepiece in my study, might have qualified for tax relief. Wonder how much the framing will cost? (with my pictures usually at least 3-4 times the cost of the paintings themselves)
Well, once it's been framed, it;'s between £67 and £83, so just a little bit much to be trivial.
Ooo! A picture, that's a nice trivial perk. Thanks. Sometime later ..... would you like that perk framed for £50 all in?
a) so the expense would need to be payrolled, as I said
b) there is no indication that it is plant in the OP
a) why? the company can buy the asset and give it to the director, and it isn't payrollable.
b) or the company can retain ownership of the asset and use it to remunerate the individual over a period of years.
"Can"-why not?
Consequences-ah that's a different question.
Think about:-
1]Taxable benefits and your personal income tax
2]IHT - if the figures are substantial would the picture be an "excepted asset"?
The IHT point is neutral unless the value and use of the painting make the company one which deals mainly in investments.
Neutral between personal v corporate ownership, but not neutral between having a painting and, say, having some cash that we're going to use for a business purpose in a few years time, honest.
Yes, but to get to that point you're making a few assumptions too far in my view e.g. has it got the cash now? would it otherwise spend the cash?
The IHT point is neutral unless the value and use of the painting make the company one which deals mainly in investments.
Whoa... are assets used to provide BIKs not used wholly or mainly for the purposes of the business concerned?
To be fair, that was Montrose's point, rather than Tony's point. Tony was just saying that personal ownership versus corporate ownership with the asset being an excepted asset (Montrose's point) puts you in largely the same place.
I'm sure we've completely lost the OP now - which is obviously a crying shame - but at least there's been no out of pram toy throwing.