I would interested in feedback on the following as it seems to involve a number of qustions all at once.
I have a client who is an online personal trainer (not Joe Wicks). They went to South Africa to visit ill parents, but now cant get back because of covid and await flights. This has been ongoing for two months.
They continue to train online but have had to purchase gym equipment and install air conditioning in a room as its so hot. They still get paid in the UK and all clients are still UK based.
Is this part of there normal business? Can they claim allowance for the above? Has it become a seperate business.
What do we think?
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Replies (6)
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I don't see a problem with capital allowances on the equipment if it was bought wholly and exclusively for the purposes of the trade (will he be bringing the equipment back to the UK with him, as there may be disposals to consider if not?). There's no reason why this would be a separate trade.
Air-conditioning would have some duality of purpose so no. Again, I assume this is installed for somewhere he lives, rather than a studio he owns or anything like that.
Checking the UK-SA DTT would also seem a sensible step.
Thank You, thats just how I am looking at it. I did say that they it might be better ti hire a unit for the period. but was told they are only £700 per room to install in SA. Wow. Thanks again.
Is W&E relevant? I thought for sole trade capital allowances, you simply apportioned the allowance.
It's not unlikely that the equipment will be bought and disposed of (out of the trade, to self/parents/sold) in the same accounting period. So the allowances probably aren't huge anyway.
I do wonder... Joe Wicks and many other personal trainers do most of their stuff with zilch equipment. Maybe a mat. I guess the idea is that folk at home can copy without specialist kit.
A gym? OP... do you ever watch your wo/man at work?
@ jdm5454 (OP).
(1) Separate or same business ? I agree previous posters’ comments that there is no “separate business” issue.
(2) Capital Allowances.
In principle, as Tax Dragon says, Capital Allowances are available on the deemed “business” proportions, and hence those “business” proportions can be claimed (on all the equipment, including the air conditioning equipment) against the self-employment income.
There is therefore a fundamental difference between (i) revenue expenses and (ii) capital allowances. For (i), the “wholly and exclusively” aspect comes into play, and hence this aspect may result in NO tax relief on expenses which (being partly “business” and partly “private”) do not meet that “wholly and exclusively” test. For (ii), however, the rules are more generous, since the “wholly and exclusively” test does NOT apply (relief being available, as I have stated above, on the “business” element).
The consequence of the above is of course that, where costs have been incurred which are partly business and partly private, one should apply maximum care in considering whether those costs fall on the “capital” side of the “capital or revenue” line (which would thus be beneficial).
Basil.
Apologies all for W& E revenue expenses/capital allowances mix-up - a case of Friday afternoon brain.
Thanks everyone for your responses. I hope you agree that its always useful when your a sole trader to bounce ideas off like minded colleagues.
