Splitting an asset dilema
Discussion
This is only hypothetical for now because I've not broached the subject yet.
Me and my business partner own the firm 50/50, 3 years ago we needed a new van so we found one for about £6000, the terms were £2K deposit and about £120 a month for 3 years.
The business itself didn't have £2K spare for the deposit so I put the deposit down myself out of my personal money and we both paid the finance off equally(about £2000 each). Now the van is paid for and its time we got another van anyway.
As its hypothetical ignore everything about tax incentives for vans and business/personal money etc and see which way you would view this. If we sold it for £3000 what should each person get out of it, should I get my £2K back and then we split the other £1K 50/50, so he gets £500 and I get £500, that way we both lose an equal amount of money on it or should we split the proceeds where I get 2/3 back and he gets 1/3 - I get £2000 and he gets £1000, but that way I lose £2000 and he only loses £1000.
I think really I should get the £2500 and him £500 but if it was an investment that went up in value I would only get 2/3rds of the profits wouldn't I?
Me and my business partner own the firm 50/50, 3 years ago we needed a new van so we found one for about £6000, the terms were £2K deposit and about £120 a month for 3 years.
The business itself didn't have £2K spare for the deposit so I put the deposit down myself out of my personal money and we both paid the finance off equally(about £2000 each). Now the van is paid for and its time we got another van anyway.
As its hypothetical ignore everything about tax incentives for vans and business/personal money etc and see which way you would view this. If we sold it for £3000 what should each person get out of it, should I get my £2K back and then we split the other £1K 50/50, so he gets £500 and I get £500, that way we both lose an equal amount of money on it or should we split the proceeds where I get 2/3 back and he gets 1/3 - I get £2000 and he gets £1000, but that way I lose £2000 and he only loses £1000.
I think really I should get the £2500 and him £500 but if it was an investment that went up in value I would only get 2/3rds of the profits wouldn't I?
scottyp123 said:
I think really I should get the £2500 and him £500 but if it was an investment that went up in value I would only get 2/3rds of the profits wouldn't I?
No. You would do exactly the same if it had gone up in value. i.e. you get your £2k back first and then split whatever is left 50/50. The van was an asset owned 50:50 by the partners. If it had needed repairs I assume you would both have paid 50%, I assume you both paid 50% towards insurance, RFL, petrol and so on.Yep we've paid for everything else straight down the middle. Initially I was going to have this new van and he was going to keep the older one we had, but as we did a lot of working away at the time we only used this new van and the other one just sat on the drive not being used so we ended up selling that one. Thats why I didn't mind stumping up the deposit because it was just going to be my van at the time.
hidetheelephants said:
Given the used van market is bonkers right now you might well get your money back!
I did think that, looking at new(er) vans they are totally bonkers, to get the equivalent van now as to what we have got would be nearer the £10K mark, the only trouble is we have put about 80K on ours since we have had it but it has been pretty faultless in that time, think the total spend including servicing and replacement parts has been about £500 in 3 years so not that bad really and it still drives great and is reliable now.scottyp123 said:
hidetheelephants said:
Given the used van market is bonkers right now you might well get your money back!
I did think that, looking at new(er) vans they are totally bonkers, to get the equivalent van now as to what we have got would be nearer the £10K mark, the only trouble is we have put about 80K on ours since we have had it but it has been pretty faultless in that time, think the total spend including servicing and replacement parts has been about £500 in 3 years so not that bad really and it still drives great and is reliable now.If a similar situation arises in the future you would be better putting the money into the business to pay for the van.
The business can then write off legitimate costs against profit and therefore corporation tax and you can take the money you put in back out without doing it via dividends / salary and therefore tax free.
My view on your question is that you get your £2k back plus 50% of the sale value difference.
The business can then write off legitimate costs against profit and therefore corporation tax and you can take the money you put in back out without doing it via dividends / salary and therefore tax free.
My view on your question is that you get your £2k back plus 50% of the sale value difference.
Edited by trickywoo on Tuesday 27th July 08:14
scottyp123 said:
The business itself didn't have £2K spare for the deposit so I put the deposit down myself out of my personal money and we both paid the finance off equally(about £2000 each). Now the van is paid for and its time we got another van anyway.
I think really I should get the £2500 and him £500 but if it was an investment that went up in value I would only get 2/3rds of the profits wouldn't I?
On second thoughts the original £2k contribution should have been treated as a loan and acknowledged by both parties to be such. Then it would be fairly clear that the van is sold, the loan is paid off, then the remainder is split equally (in line with the ownership of the business).I think really I should get the £2500 and him £500 but if it was an investment that went up in value I would only get 2/3rds of the profits wouldn't I?
Edited by NickCQ on Tuesday 27th July 10:36
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