Sole trader buying assets

[AndyC_123]

Hi

Have a friend who is a personal trainer. He is opening up a gym very shortly and had recently spent about £12k on equipment. I run a ltd business and so any assets I buy obviously go onto balance sheet.

I'm guessing this would be different for him as a sole trader? Declared income last year was probably £15ishk. Can he depreciate his new assets against profit over a set number of years or does the capital allowance all have to go in year 1?

Cheers

[Eric Mc]

Not different at all.

Sole traders should prepare accounts using the same principles as limited companies.

After all, accounting principles and conventions were invented before limited companies were.

[AndyC_123]

Thanks.

Can he depreciate assets by up to 18% a year to offset income? I have told him to speak to an accountant but he's struggling for cash at the minute.

[IJWS15]

AndyC_123 said:

Hi
................................ and had recently spent about £12k on equipment. ...........

......................................Declared income last year was probably £15ishk. ....................................

No wonder he is struggling for cash, may be struggling more when HMRC catch up with him.

He needs to find a few notes and get an accountant. It will save him money in the long run.

[MaxFromage]

AndyC_123 said:

Hi

Have a friend who is a personal trainer. He is opening up a gym very shortly and had recently spent about £12k on equipment. I run a ltd business and so any assets I buy obviously go onto balance sheet.

I'm guessing this would be different for him as a sole trader? Declared income last year was probably £15ishk. Can he depreciate his new assets against profit over a set number of years or does the capital allowance all have to go in year 1?

Cheers

I think most accountants here can see how he could end up paying more tax in the first few years than an accountant would cost

He simply needs an accountant straight away. No excuses.

[MaxFromage]

And does he really want to run a gym as a sole trader?

[Eric Mc]

AndyC_123 said:

Thanks.

Can he depreciate assets by up to 18% a year to offset income? I have told him to speak to an accountant but he's struggling for cash at the minute.

Depreciation is an accounting technique.

Claiming Capital Allowances is a tax computation calculation.

In most circumstances, the choice of depreciation rates for use in the accounts is of no significance to the tax situation because depreciation is ignored for tax purposes. Instead, Capital Allowances are claimed using the rates and rules available for the relevant class of asset as set out in the tax legislation.

[Mr Pointy]

MaxFromage said:

And does he really want to run a gym as a sole trader?

Why not?

[Simpo Two]

Eric Mc said:

Capital Allowances are claimed using the rates and rules available for the relevant class of asset as set out in the tax legislation.

And so for gym equipment this is...?

[Eric Mc]

Simpo Two said:

And so for gym equipment this is...?

Up to 100%.

[MaxFromage]

Mr Pointy said:

Why not?

Risk from multiple sources, financial, protection of personal assets for example. Many accountants won't take on pubs, shops etc. Gyms are often on the list too.