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If i wanted to invest in purchasing a car park, would it be

Customer Question

If i wanted to invest in purchasing a car park, would it be better to buy it personally, or via my current company - or set up a new company?

Would there be tax advantages to buy using my current ltd company money that will have only been taxed at 20% corp tax?

Or is there some kind of tax relief on investments like this?

Or would it be better to raise financing via my current company (or a new company) as interest would be written off tax?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

Whichever company you use really does not matter, Corporation Tax (CT) is at a flat 20%. However I would always recommend that you do this through a company, either an existing one or set up a new organisation.

There are basically two reasons. Firstly if the car park venture fails then it does not impinge on your existing business or upon you personally. Secondly you cannot offset losses on one activity against another of a different nature within the same company.

Any interest paid on loans for business purposes is allowable against CT. There is no specific tax relief available for this activity.

I do hope I have thrown some light on this for you. Don't hesitate to come back to me should you feel the need.
Customer: replied 2 years ago.

Hi Keith -


 


Thank you for the great answer - it most certainly has helped get my head around the best way to accomplish this.


 


One final point - if i was to setup a new company in order to purchase the asset - is there a tax effective way to move money from my current ltd company to the new company without drawing it as a dividend first?


 


E.G via a loan from my current company to the new company or the old company buys shares in the new one?


 


 


 


Thanks again!

Expert:  bigduckontax replied 2 years ago.

There is a solution which is perfectly legal and will not attract the attention of the authorities, an inter company loan. Make sure that the it is annotated in writing signed by a director of each party or the company secretary. This can state the loan amount, the repayment schedule and the interest to be paid, if any. I would recommend this.

 

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bigduckontax, Accountant
Category: Tax
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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