I have a higher turnover in the current year than i did in the tax year 11-12. I also bought a new van in that tax year so have a much higher total of capital expenses than i will this year.
As such it probably makes sense not to claim their full value under AIA as i have done the last few years but carry some of the value over into this year.
As i only went self employed again in 08 i have always claimed the full value of capital expsenses under the AIA and have never written them down.
Do i simply create a pool for them and use the writing down allowance of 20%?
Also if this is the right route can i claim some of them under the AIA and just choose how much to write down?
Thanks for your help.
And don;t worry its all done apart from this. Nothing like a deadline to push you on....
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Even worse is having taxman coming at 10am tomorrow.
And I don't know what AIA is otherwise I could ask him.
I've just googled it and found out. I have always put down machinery as expense, as most only last a couple of years or have no reselling value. Will give him something to pick me up on.
Simon, I can ask him if you like?
Not sure you have any choice with the van mind
All i have gathered is that if a vehicle for £9,000 is purchased it should be a 'cost' , that is spread say over 3years accounts .... ie £3,000 per years under vehicle costs.
any capital value of this at the end of year 3 or depreciation is added or if traded in it is lost against another say £12,000 vehicle ... its a fixed cost.
variable costs; ie fuel, tax, insurance, mot, servicing & repairs should all come under the year they are paid out for.
ive never had a vehicle over £5,800 and i have it on a loan so have put the £248/month (inc 8.7% interest) costs on each year ie £3,000 a year under vehicle costs...
£4,000 fuel , other associated costs, admin, marketing, machines, internet / phones/ mobiles .oils/ fuels / insurances / storage etc there is not much left as profit !
The tax- code is about £9200 now too for myself.
Not quite sure what the 20% writing down allowance means - anyone?
My theory:
year1:cap exp: £10k, writing down allowance(wda) 20% , £2k claimed on tax return, £8k (pool) carried forward.
year 2: no new cap exp, wda 20% on £8k, £1.6k claimed on tax return, £6.4k (pool)carried forward.
year 3: new cap exp £4k + 6.4k b/f ; pool now £10.4, 20% wda, £2,080 claimed, £8,320 (Pool)carried forward
and so on. it is the wda on the current value of pool you claim so it is not 20% over 5 years, but rather 20% of pool each year, which will therefore be less each year as pool total reduces.
And to complicate matters further, wda reduced to 18% from 1 mar 2012. (next tax return...dont panic)
It is actually quite straightforward i think, so long as you are happy handling numbers.
I'm depreciating my van at 25%. I was always told you could depreciate at various percentages providing they reflect the life span/value of the equipment. Typically 50-100% for short lifespan machinery (hedge cutters etc) 20-25% vechicles, 2- 10% long term investments (land, yard buildings). There are limits and guidelines on the HMRC website.
I've just completed my tax return and put depreciated items in the AIA.
And this link might help if you can cut through the verbal garbage:
http://www.hmrc.gov.uk/capital-allowances/plant.htm#5
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