A vintage wedding car sole trader is planning for retirement in 5 years. His vintage cars are non-depreciating assets and hold their value. Upon retirement I am concerned of the capital allowance balancing charge. To help mitigate this I am considering various options, namely: Ltd, disposals over a number of tax years and also bringing the wife into the business as a partner.
When a sole trader moves to a partnership does this create a cessation event for the sole trader? The capital gains is not a concern due to the H+W no gains/no loss but would the capital allowances trigger a balancing charge? I am also wondering if there is a cessation event whether or not there would be an election to transfer assets at their WDV to the partnership as the business is still trading.
Also if anyone has a better option then I would be happy to consider it.
Thanks in advance.
Related resources
Replies (3)
Please login or register to join the discussion.
I personally think you should not be offering this advice. There are probably too many complications to cover everything and no figures to work with. As a hunch I expect the partnership route may suit. The sole trader would not cease and can continue with the same basis of assessment. You haven't mentioned the year end but if it is 5 April and the changes took place the next day then the wife's accounting period would also fall in line with the tax year. The 6 April opening WDAs/pool value would carry over from the closing balance on 5 April. As far as I know there would be no elections necessary in those circumstances. There could be other issues but HMRC seldom query husband/wife partnerships on the same way as Ltd Co (e.g. Artic Systems).
Is the wife going to continue the business when her husband retires?
I'm struggling to see your exit route here.
