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Post Info TOPIC: AIA on cessation


Newbie

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AIA on cessation


A hairdresser was self employed for several years, renting a chair in a salon.

When lockdown hit, she gave up her rental chair, and refurbished a spare room in her house as a salon, starting working from there in Sept 2020.

She stopped hairdressing altogether in Aug 2021.

Should I claim all the salon conversion costs on the 2020/21 tax return, even though trading stopped less than a year later?

Would the assets such as the chairs and dryers etc just revert to her personally? As they're only worth around £1,500 used, they would fall within the CGT allowance?

Is there anything else I need to consider?

Thank you



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Master Book-keeper

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You can declare AIA on the 20-21 tax return, but they will have to be accounted for as a balancing payment at market value on cessation in September 2021.

It isn't a capital gain, as you will have claimed tax relief for it in the 20-21 accounts.

Would need more details on the refurb but would imagine these come under capital costs and therefore not tax deductable.



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John†

†Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Newbie

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Anything else to consider. A few. Some not all, claiming for a bit of paint and a shelf in one room could result in CGT when sell the house. Worth it? Need to repay seiss?



-- Edited by SoloHans on Tuesday 18th of January 2022 10:34:04 PM

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