Leasing a personal asset to your Business

M

money man

Registered User
Messages
406
Could i purchase some machinery personally and lease/hire it to my company as required by the company?
 
Because I have the funds the company does not (would have to use expensive borrowings).
Because having fixed assets in my company accounts makes them alot more difficult to prepare i always wary of this since receiving a huge accountants bill for a very small,simple, uncomplicated company which i set up,filled out most forms for myself etc but still was charged significant fees for. If i keep the books simple i can prepare them myself and get my sister who is an auditor to check them over.
And if i do it this way i wont have to depreciate the machinery over 8 years only giving me a small expence on my books as opposed to a larger income stream meaning corp. tax on the difference. Do these reasons seem reasonable/correct?
 
You would probably need professional advice.....but a few points are:

1. You (as a sole-trader) may be seen to be carrying on a trade of leasing
2. As such you would only be able to write-back\depreciate your machinery over 8 years
3. Leasing payments\receipts would probably have to be at market rate (connected persons)
4. The company would be able to allow the lease payments as a deduction
5. You would complicate your own personal return
6. Probably would be as easy to loan the money to the company (directors current a\c)
7. Leases can complicate company accounts as much as fixed assets

In your case, I'd probably recommend buying the fixed assets through the company but it really depends on the circumstances.
 
you need to change accountant, as your accountant should not be a factor in business decisions.

Anyway, it's better your comany buys the asset and you guarntee the loan, as when the company pay's for it, its before tax and when you pay for it, it's net of income tax
 
You must log in or register to reply here.
Back
Top