Best way to transfer personal assets to a limited company?

[kara786]

Hi everyone,

Me and my friend are starting a new business which is vehicle rental/leasing.

We have a few vehicles which are owned outright by us personally that we want to transfer to the company with no payment expected in return. we just want them to be an asset of the company.

what is the best way to transfer them to the business?

Also are there any accountants on the forum that manage vehicle leasing/hire businesses and have experience, as i am also looking for an accountant to deal with my business.


Thanks

 

[Scalloway]

My thought would be to have the vehicles registered in the company name.

Not expecting payment may prove to be a false economy. The best way to get money out of a new company tax free is to sell it personal assets and get paid back as the company makes money.

 

[Darren@dynamoaccounts]

In order to sell them to the company, you'll need to establish a fair value on the vehicles. The V5's should then be put into the company name, insured as such and in effect you'll end up with the company owing you money by way of a directors loan. You can then draw down on the loan as and when cash allows.

You may want to put some sort of security over the cars if the value you're putting in is significantly higher than your fellow director/shareholder, perhaps just a consideration.

Our main practice has similar clients (Henton & Co) including a number of performance car hire companies.

 

[Clinton]

Scalloway makes a very important point about the tax saving potential of not donating these vehicles to the company but selling them. The company doesn't need to pay you cash of course. It simple ends up owing you money. In the future when the company makes a profit you don't need to take that profit out in dividends and pay tax on it, you simply take that out as a loan repayment.

That is the basic idea.

I would advise that you also consider leasing the vehicles to the company rather than selling them.

You'll want a good accountant on your side no matter what you do.

 

[kara786]

Thanks for the replies everyone.

If the vehicles are sold to the company, is there then a time frame where the company would have to pay back the directors loan?
Also is it the case as soon as the company makes a profit the directors loan would need be paid off immediately.

The only reason I ask the above is because the suggestion is for the vehicles not to be donated, but rather be sold to the company, we would not be in a rush for repayment of the vehicles.

Clinton, why do you suggest that the vehicles are leased to the company rather than being sold to the company.

Thanks

 

[Darren@dynamoaccounts]

Repayments to a directors loan are at your discretion so can take as long as you wish. Normally as part of a tax planning exercise.

Similarly with the leasing, it's a way of retaining ownership of the assets but you also have to look at the tax aspects from the point of view of yourselves as well as the company. Again, would need to be in possession of all facts but it's an option.

The clients whom have carried out similar transactions have in the past sold the vehicles to the company at fair value due to their tax situation, then utilised the repayments as a method of extracting funds due to being higher rate tax payers.

 

[kara786]

Thanks for the reply darren. Anyone in particular I should speak with at Henton &co ?

 

[Darren@dynamoaccounts]

Sure Kara, feel free to speak to Chris Howitt a call on 0113 243000

 

[STDFR33]

I worked very briefly for a £30m turnover vehicle rental business a couple of years back.

There’s nothing specialist about the accountancy and tax. Though someone with industry knowledge will give that extra value.

Renting the vehicle to the company is an easy way to avoid the directors being liable to a BIK.

 

[UK Contractor Accountant]

What sort of vehicles are we talking about here and how many?

Have you looked at the cost of insurance & credit licences?