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What happens to your business tools if you go Bankrupt?
You can continue working and running your business on a self employed basis if you go bankrupt.
The business tools you own and use personally (known as the tools of your trade) are exempt assets. In other words you will be allowed to keep them.
However, any items which you do not use personally or other business assets such as heavier equipment and machinery will have to be sold. Where necessary a valuer will be appointed to confirm what they are worth.
If you want to keep items which would otherwise be sold you can make an offer to buy these back from the Official Receiver. This is based on their 2nd hand value
There is a huge variety of self employment. As such no list exists defining the tools are exempt. It will always be down to the Official Receiver to make a final decision.
As a rule of thumb you will be allowed to keep your hand tools and similar items without which it would be impossible to carry out your business. In other words if you are a plumber, electrician or carpenter you will be allowed to keep the tools you carry round in your van.
However if you own equipment that you do not use personally (perhaps it is used by an employee or is surplus to your requirements) it is unlikely to be exempt. In addition heavy machinery such as a digger or equipment in a workshop is not exempt. If you want to keep these things you are likely to have to pay the Official Receiver for them.
Tools which you own but are used by employees are unlikely to be exempt assets and might have to be bought back from the Official Receiver if you wish to keep them.
Is your van or other work vehicle at risk if you go Bankrupt?
The general rule in Bankruptcy is that any vehicle you own worth more than £1000 or which is surplus to your requirements will have to be sold. However this does not apply if the vehicle is a business tool.
Typically if you require a car or van to carry out your day to day business it will be an exempt asset. You will be able to keep it even if its value is greater than £1000.
That said, value of the vehicle must be excessive. In other words if you are a delivery driver the Official Receiver may allow you to keep a value worth £3000 but not £10,000.
If you own a second vehicle it is unlikely to be exempt. You will have to buy it back from the OR of you want to continue using it in your business.
Need more advice on whether you can keep your vehicle or tools if you go bankrupt? Give us a call (0800 044 3149) or complete the form below.