Claiming tax back for computer equipment 26 April 2009 at 4:45PM in Cutting tax 6 replies 10.2K views

muggz

Hi all,

After much searching on Google I thought i would ask here as I cant find the answer. In the last 2 months I have become self employed and I have realised alot of my computer equipment is out of date.

I want to buy a new set up however I have heard that you cannot claim tax back for the equipment straight away as it is staggered over several years. I am only planning to be self employed for one or two years so forking out a lump of cash I may not get back is a bit of a risk.

Does anyone know if that is the case?

Thanks in advance

tyllwyd

My understanding is that the rules have changed recently, so you need to find out about the Annual Investment Allowance. You will probably be able to claim 100% of the cost of your equipment.

Mind you, remember that you don't get the cost of your equipment back, you only get tax relief on the cost.

muggz

Hi tyllwyd,

Thanks for the reply.

Ah great, its good to know I need to be searching for the term Annual Investment Allowance, that helps alot.

By tax relief do you mean, if I buy a £500 pc, I wont have to pay £500 of taxes?

tyllwyd

No, if you buy a £500 pc, then that is £500 that you don't have to pay tax on. So if you pay tax at 20%, it would save you £100 in tax.

roger_c

Also remember if there is any private use of the computer(s)/equipment then you will need to have a separate 'asset pool' in your capital allowances computation when working out how much you can deduct from your turnover. There should be more about capital allowances on the HMRC website.

Capital allowances are pretty much the tax world equivalent of depreciation.

James123_2

Yes, add all this to your hardware pool in order to receive a staggered allowance - used to be 40% in first year then 25% to follow (from memory). A quick call to your friendly IR will generate the correct information - they really can be helpful.
For a few years there was a 100% allowance on IT kit - alas, not any more!

tyllwyd

James123 wrote: »

Yes, add all this to your hardware pool in order to receive a staggered allowance - used to be 40% in first year then 25% to follow (from memory). A quick call to your friendly IR will generate the correct information - they really can be helpful.
For a few years there was a 100% allowance on IT kit - alas, not any more!

I remember that 100% capital allowance, and you are right that it ended. But they have changed the rules again since, and it is the annual investment allowance that is important for the OP.

http://www.content4reprint.com/finance/taxes/business-tax-reform-in-the-uk-introduces-annual-investment-allowance.htm