Purchasing a boat for hire through the business

[George Smiley]

For some time I've been wanting a narrow boat.

I recently stopped working through my Limited company but have a large pot of cash that is sitting there. The original plan was to keep it as a rainy day fund in the bank with the company dormant but I've found a narrow boat I would like to purchase.

I've looked at closing the business and using the entrepreneur relief but there is a chance I will want to go back to working through the ltd company within 2 years. Taking dividends isn't an option as it will not be tax efficient.

Is it feasible to purchase the boat through the company and treat it as a business asset providing I rent it out occasionally? I'm aware of CGT but the boat will sink in value over time.

Be interested to hear your views. Of course I can ask my accountancy firm but they are geared up to advise on IT contract and accounting matters.

[anonymous-user]

Why not take the relief now and just set up a new co if you decide to go back to work?

You'd have a P11D liability if you use the boat and don't pay market rate and the revenue wont let you run a hobby under the guise of a business.

[George Smiley]

I've had some mixed reading/advice on the relief

Am I correct if I use the relief I have to close the company down and not trade/form another for at least 2 years?

(thanks for the note about the P11d element)

[anonymous-user]

George Smiley said:

I've had some mixed reading/advice on the relief

Am I correct if I use the relief I have to close the company down and not trade/form another for at least 2 years?

(thanks for the note about the P11d element)

I am not an expert but I have claimed the relief and kept trading.

Will be worth paying a decent accountant a few quid for a review.

Edit. You may be thinking that the revenue don't want people closing companies on an ongoing basis to take advantage of ER.
If it's a genuine situation then I don't think you will have an issue but to repeat I am not a professional.

Edited by anonymous-user on Tuesday 30th October 01:00

[George Smiley]

Thanks

I will go back and ask the question again in writing. Advice that I've read on other public accountancy pages suggest so long as conditions are met you can claim it quite often up to a limit of £1m (I think it was). Looking at the budget anyway, if I go back to contracting it appears the benefits may no longer exist though I am sure there will be some ways to minimise losses.

[anonymous-user]

I think the limit is now 10 million, up from 5.

[George Smiley]

I think I might just squeeze in the limits then

Looking at HMRC states no limits but company has to be closed: https://www.gov.uk/entrepreneurs-relief/how-to-cla...

[Eric Mc]

Or shares disposed of. So the ownership of the company could be changed rather than the company actually closed. It's a "retirement from a trade" relief rather than a "giving up altogether" relief.