Asset incorporation

I have a client who has been trading for some years. Over that time he has purchased substantial items of plant and machinery that are used in his business. The annual investment allowance has been claimed on these so for tax purposes these have been written down to £nil.

The client now wishes to incorporate his business but what happens about these assets for tax and what value should be allocated in the final sole trader and first limited company accounts?

Will the client have a tax liability on these assets as a sole trader? If necessary perhaps we could assume that they are worth about half their original cost. Alternatively is there a way to hold over this into the new company?

Query 18 615 – Company Man

Reply from SWI

It is normal practice for assets to be transferred at market...