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Sam
Sam, Accountant
Category: Tax
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Can you please provide tax advice on office purchase to be

Customer Question

Hello
Can you please provide tax advice on office purchase to be used by our company?
I am planning to purchase an office (Roughly 500,000£) from either
A. my foreign income from my domicile country outside uk. In this option I will be registering the office in my name and not the company’s name. (Do I have to pay income tax on the funds transferred to the UK to purchase the office? and if yes what is the percentage or the amount on the above office amount?)
or
B. The company will get a loan from a from a bank or any other institution not in the UK
If option A, would I be paying income tax? The payment is from my previous income before acquiring my residency.
Or Option B, would the loan be deducted from my profit and loss to ensure I am able to pay this loan. In other words, would I be paying cooperate tax on profit then pay up the loan?
In the end I am trying to find out how much each option will cost me or the company in taxes
Submitted: 3 months ago.
Category: Tax
Expert:  Sam replied 3 months ago.

Hi

Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

Cold you advise

1) From where does the foreign income arise is this OLD income or current/ongoing income, please expand - and is this usually declared to HMRC - or where do you pay tax on it - has any of this income been brought into the UK OR spent in the UK

2) Do you live and work in the UK - when did you arrive and how long do you plan to stay and what visits do you make out of the UK

3) What will the office be used for within this company you may consider purchasing it through what does your business trade in?

I can then advise further ( I may not respond to any reply to make until tomorrow morning - if that is acceptable)

Thanks
Sam

3)

Customer: replied 3 months ago.
Hi Sam,
Me and my wife are working in Bahrain and we opened a company in the UK (1 year ago) so this income is from our salaries accrued through the years. I hold the British passport but not a resident yet (will be in a couple of months)
We started working in UK recently but we will still be going back and forth to Bahrain
The company currently is renting and office and we are thinking of buying one our company is a service provider and it will be used to seat up to 20 executives.I hope this help
Expert:  Sam replied 3 months ago.

Hi

Thanks for your response

As the office will be used in the business then its best to buy through the company so all expenses can be offset against profits.

If you use the income you have earned abroad (and none of it relates to earnings since you started working in the UK) and for those years you were treated as not resident by the UK tax authorities, then none of it will be considered liable to UK tax as earned whilst abroad and not resident (and I presume has nothing to do with the UK company) Your tax position lies in Bahrain

But then this tout sees you not having the company own the office and you cannot claim the costs that arise to run it, and instead would perhaps need to rent it to the limited company. (which then means you also have rental income as an individual to declare to the UK tax authorities)

If you take a loan out (whether from the UK or not) then just the interest element of any loan repayment can be claimed as an allowable expense (and of course then the running costs) as the company will own the office.

Do let me know if I can assist further, or need me to expand on the answers provided

Thanks

Sam

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