Reclaiming pre-trade bills

Sure, bills incurred pre-start up might be claimed towards tax. In case you are establishing as a restricted firm, you would possibly be capable of declare ‘related’ bills for as much as seven years earlier than the enterprise is formally integrated.

Typical gadgets the place you might be able to declare enterprise bills ought to be tax deductible embody:


Computer systems and related software program
Journey to satisfy potential prospects
Firm incorporation charges
Skilled companies (corresponding to accountants or solicitors)
Web site creation

Nevertheless, you must watch out. When you’ve already traded as a sole dealer earlier than the restricted firm is shaped you’ll have to switch the property and liabilities throughout to the restricted firm after its formation. This isn’t troublesome offered you retain good data of revenue and bills and property and liabilities. Hold all of the receipts and invoices in case you might be challenged by HMRC. The transaction can be made by your director’s present account, which if in credit score, creates a mortgage between you and the corporate. This mortgage might be repaid to you at any time with no tax legal responsibility being incurred.


VAT on pre-incorporation or pre-trading bills

VAT might be reclaimed on gadgets purchased within the 4 years earlier than registration if they’re classed as items – this will embody inventory, workplace gear or vans, for instance. VAT might be reclaimed on companies equipped within the six months earlier than registration corresponding to accountancy charges, offering they don’t instantly relate to items which have been bought previous to registration. This may increasingly embody hire, promoting or phone payments. In all instances you will need to have a sound VAT bill and the acquisition should have been for enterprise functions.

The next circumstances have to be met:

The person ought to be reimbursed in full by the corporate
The person mustn’t have already claimed the VAT (i.e. as a registered sole dealer)

A pc is an asset (versus an expense), which is recorded within the stability sheet of the enterprise and written off (depreciated) over its helpful life – usually three years. Computer systems at present qualify for the Annual Funding Allowance of expenditure – at present as much as £1 million in 2019/20. (The annual funding allowance is usually reviewed.)

“Potential purchasers are most likely not conscious of what’s obtainable,” says Richard Hepburn, operations supervisor of specialist sole dealer accountancy agency Gorilla Accounting. “They’re stunned you possibly can reclaim VAT earlier than you’re VAT registered.”

When you’ve got not already appointed a chartered accountant, you contemplate speaking to at least one earlier than doing all of your marketing strategy. They will supply recommendation on the important thing factors in a plan in addition to offering extra normal recommendation on beginning a enterprise together with document protecting and who to advise of your new firm.

Additionally see: What bills can I declare by my enterprise?