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Sam
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Category: Tax
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My friend is a 100% director and the shareholder of a

Resolved Question:

My friend is a 100% director and the shareholder of a limited company. The company owned a business vehicle (van).
He considers to gift the business vehicle to himself permanently at no price paid to his company for transfer of vehicle.
VAT was previously claimed on this vehicle when it was purchased by the company. AIA was also claimed.
What would be the tax implications of the transfer to director/shareholder from the directors and the company's perspective?
Regards,
Yildiz
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.

HI

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

Has your friend claimed the full capital allowances against his business profits or is there still a writing down allowance to claim? (I assume yes as you advsie AIA claimed)

How much is the van worth now

Thanks

Sam

Customer: replied 1 year ago.
Van was purchased for £8990 + £1798 VAT
Capital allowance was claimed in full alongside the input Vat
Expert:  Sam replied 1 year ago.

Hi

And the vans value now ?

Thanks

Sam

Customer: replied 1 year ago.
NBV is around £5800
Customer: replied 1 year ago.
vans value after depreciation charges is £5800
Expert:  Sam replied 1 year ago.

Hi

You advised you claimed AIA which mans for tax purposes the van is worth ZERO as 100% of the value claiemd against profits in the year of purcahse, please clarify

I need the resale value of the van as if it were to be sold at market value

Thanks

Sam

Customer: replied 1 year ago.
163;4700 Is the current Market Value
Customer: replied 1 year ago.
Tax Written Down Value is Zero as AIA has been claimed
Customer: replied 1 year ago.
Net Book Value (Cost less depreciation) is £5800
Expert:  Sam replied 1 year ago.

HI

Thanks for your response

If you have claiemd AIA then the Book Value is ZERO not £5800 as there is no value for depreciation purposes so this has no relevance on the position at all.

Its the markwt value so

1) You need to add back in the balancing charge of £4700 plus VAT into the accounts and for the director (so standard rate 20% on top- total £5640

2) P11d prepared at year end for the value of the van £4700 Plus 20% VAT (£5640) which will be liable to tax on the employee (director) and Class 1 National Insurance on the company - so submitted with P11db

Then for VAT purposes you will show the output VAT as £940 against the sale of £4700

Let me know if I can assist further

Thanks

Sam

Customer: replied 1 year ago.
is the total of £5640 going to be treated as dividend or employment benefit when looking at the matter from directors point of view. (He is a 100% shareholder and Director)
Expert:  Sam replied 1 year ago.

Hi

Its an employment benefit - (that's why its recorded on form P11d) so liable to tax at year end when HMRC look at the salary (which must be paid dividends, and any other incomes) even if the total position of salary and benefits add to less than £8500

Thanks

Sam

Sam and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank you very much for your answer.