Tax relief on equipment for daughter's business?

Trying to understand if I can make a tax efficient gift to help my daughter set up micro business

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I'm currently a sole trader that pays higher rate tax.  I would like to help my daughter (teenager) set up a small jewellery and glass making business by investing in the workshop equipment she needs (kiln and initial set of materials ~ £1k).  If this was equipment for my own trade it would be a company expense and to that extent deductible from profit.

She is under 16 and a budding artist so we've been talking about her setting up her own business. Is it possible to make this investment tax efficiently? Or is it purely a gift I have to make to her after tax?  

Replies (8)

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By Roland195
08th Dec 2023 15:37

Can you not partner her in her new venture? As she is under 16, this may help with other difficulties encountered with bank accounts, online selling etc etc

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Replying to Roland195:
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By mt.accountingweb
08th Dec 2023 15:41

Thanks, yes, that's what I was hoping to do. But not sure how to go about it and make the investment properly. E.g. do we set up a new ltd company? how would the personal investment work on my own tax return?

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Replying to mt.accountingweb:
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By David Ex
08th Dec 2023 17:07

mt.accountingweb wrote:

Thanks, yes, that's what I was hoping to do. But not sure how to go about it and make the investment properly. E.g. do we set up a new ltd company? how would the personal investment work on my own tax return?

Ask your accountant. This isn’t a site for people who want free professional advice.

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the sea otter
By memyself-eye
08th Dec 2023 16:35

You are overthinking this.
Just lend her the money.
There are no 'tax advantages' for the small sum involved.
Do not set up a company (at least not yet)

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By David Ex
08th Dec 2023 16:50

If you’re worrying about tax efficiency for these sums, you’re probably missing something more important about the plans.

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By FactChecker
08th Dec 2023 18:02

Daughter "is under 16" ... but we don't know if that means her 16th birthday is later this month or she is a budding entrepreneur aged 10.
My point being not that we (on the forum) need to know, however it is but one of the very many facts that would be established in a proper consultation with a professional adviser.

The seriousness and viability of the proposed business needs to be bottomed out well before any consideration of funding needs (the business) or of tax efficiency (OP).

There's a rather large difference between 'investing' in a child's latest hobby and setting-up a business (with operational and growth plans that will affect optimal structure and funding needs).

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By Tax Dragon
08th Dec 2023 18:22

The answer to the question asked is that you don't get tax relief - but your daughter does. Or could, if the business succeeds and profits become taxable as a result.

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By possep
08th Dec 2023 19:22

You are a sole trader so the expense, if it were for your own business, would not be a company expense but a business expense. You are a higher rate taxpayer and are asking questions about a small investment of £1,000 and whether your daughter needs to set up as a Ltd Co. This suggests that you don't really understand any of the relevant tax matters for either of you. Have you got an accountant? If not, get one soon. A higher rate taxpayer can afford advice from a professional and paid advice.

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