tax return tools allowance

lancenotalot

I am currently wading through my purchases book and am not quite sure on the rules regarding tools.

I sure I have read somewhere that I cannot claim 100% for tools I purchase for my business.I am a sole trader and am not talking huge pieces of kit,just things like jigsaw,router,drills etc.

I have looked on the self assesment page but they talk about plant amd machinery,not quite sure what I would class mine kit as?

orangeslimes

if they are small tools - e.g. cost under £100 or so you can claim the whole cost.
but bigger tools over £100 count as assets to your business - e.g additions to plant and machinery and you claim part of the cost and depreciation in subsequent years (but i am not sure exactly how it works)

(please note though i am not a qualified accountant- but i know it works something like above)

oompahloompah

Starting from April 2008 businesses are allowed an "Annual Investment Allowance" of up to £50,000 to invest in plant and machinery - which is a term that tends to cover all capital expenditure for a business except for cars e.g. tools, computer equipment, office furniture etc. Up to the £50K allowance should be reclaimed in the tax return. Expenditure over £50K (plus anything carried forward from prior to April 2008) is "written down" at 20% per year (used to be 25% before the AIA was introduced), e.g. if there is £5000 carried forward, Writing Down Allowance is 20% of £5K, which is £1000. Following year, 20% of the remaining £4000 is written down, i.e. £800; the following year, 20% of the remaining £3200 is written down, i.e. £640 and so on. This should also be claimed on the tax return.
HTH

torianut

Sorry to bump this thread but looking for some similar advice, my OH is in a similar situation to the OP so thanks very much for the info on tools etc.

Just wondering what happens about the van he bought for his business use? Was only £1200 but not sure if I this is an allowable expense?

Thanks very much in advance for your help xx

mrkbrrws

The van is capital expenditure and capital allowances can be claimed.

If there is no private use of the van then the £1,200 is added to any other equipment purchased in the year in the main pool and Annual Investment Allowance would be available.

torianut

mrkbrrws wrote: »

The van is capital expenditure and capital allowances can be claimed.

If there is no private use of the van then the £1,200 is added to any other equipment purchased in the year in the main pool and Annual Investment Allowance would be available.

Thanks...so that means as the items don't even add up to £2000 we can allow for all?

mrkbrrws

torianut wrote: »

Thanks...so that means as the items don't even add up to £2000 we can allow for all?

Yes, as long as they were bought after 6 April 2008.

theculverhouses

Sorry to butt in here but when you spend more than £50K just watch out as it is pro-rated. This came in for the 2008/9 year so if your year end is 30 September 2008 (6 months in 07/08 and 6 in 08/09) then you actually get an allowance of £25K on everything purchased post 6/4/08. You still get allowances for 07/08 purchases but under the old regime.

This might mean that say you are going to buy two new vans in May 2008 for £15K each, some of it won't qualify. Key is to check your year end and pro-rate it down. If in doubt ask an accountant (e.g. like me!).

That said we're now so far down the road in 2008/9 and 2009/10 that for a lot of people this planning is no longer so relevant but worth checking.

Cheers
Tim

torianut

Thanks for all the help - OH only became self employed in June 08 so £2000 up to year end 05/04/09 should be ok.