Assets are items or property of an enduring nature that are not consumed within a year and usually cost over £100. They include computer equipment, furniture, tools, vehicles, etc.

Sell personal assets to the new company at market value. At the outset, the company will probably not have the funds available to pay the sole trader for the assets. However, assuming that the sole trader becomes a director of the company, this can be overcome by creating a debt from the company to the sole trader (in the form of a balance on the director’s account), which can be cleared when the company has the funds to do so. For capital gains tax purposes, the assets will be treated as being disposed of by the sole trader at market value, and this may give rise to a capital gains tax liability. Where the assets are transferred to the new company in exchange for shares, incorporation relief may be available.