Starting a new company

RossDargan

Hi Fengirl

Yup, you are correct (as you already know!) When do you draw the line however? I now get why you declare stuff as capital due to the fact that the usefulness of the item spans many years - but a stapler that might cost £5 could last 10 years - surely this is an expense... this suggests there is a minimum amount?

Also I noticed there is something about short life span items (which you could argue a pc is in my case) does this mean I can reclaim 50% in year 1 and 50% in year 2.

Now final question. In the above example if my pc cost £1000 then I would put £500 as an expense somehow, in the second year do I put the other £500, or do I put £250.

Thanks for your help, it really is appreciated!

PlutoinCapricorn

When I mentioned the possibility of classing some items as expenses not capital, it was before Ross mentioned a cost of £450, I was speaking generally. There was no suggestion that all items can be put into the expenses section.

I too was thinking about such things as hole-punchers: mine has lasted for years yet cost next to nothing. You can get 'real' calculators in Poundland and tiny netbooks in Toys R Us! It would be very interesting to know where we are supposed to draw the line.

fengirl_2

In practice, small items which cost under £100 are generally treated as revenue.
Ther is no 50% capital allowances, you can claim 100% under AIA or 20% under the normal rules.

RossDargan

fengirl wrote: »

In practice, small items which cost under £100 are generally treated as revenue.
Ther is no 50% capital allowances, you can claim 100% under AIA or 20% under the normal rules.

lol, just when I think I have got it something else springs up to confuse me! Basically what you saying is that as long as its not above 50k then I can just claim 100% against the taxable amount.

I think a little example might help me a bit:-)

Incomings: £1,000

Web site hosting: £100
Server: £ 400
Mortgage Interest Pr Yr: £5000 (20% of house space, for 4 hours a week)=£23.81

Total Expenses:
£123.81

Total CA:
£400

Taxable Income:
£1000-£123.81-£400 = £476.19

No NI class 2 as taxable income below 5,075
No NI Class 4 as taxable income below 5,075

Income tax = my rate (40% based on full time job) * total taxable income
= £190.47


Sorry, I know its a long post but I think I finally have it cracked

Thanks (A lot!)

Ross

vaio

I’m not an expert but are you sure the time element in the mortgage interest should be included? I would have thought it would be a straight 20% of the total house running costs

PlutoinCapricorn

Assuming that the Sole Trader registration will apply as from a date in the current tax year, you will get a self assessment form next April. You will have until Jan 31st 2011 to complete it, assuming that you complete online, although leaving it until the last minute is not advised.

This means that you have ample to time to identify and deal with all these points. Have you investigated www.businesslink.gov.uk? They have free workshops. Apparently HMRC can be very helpful too, so you could always ask them about the issues that arise.

It is useful to try Googling too, although you can pull out a lot of out of date and wrong information: for example, I found figures of £250 and £300 for the expense/capital item borderline.

I am not sure about the mortgage interest, but if you are spending more time at home than you would if you were not doing this work, then a percentage of water, electricity and council tax may be claimed.

RossDargan

Hi Plutoin

You are quite correct about Google - this is the major issue I have faced (but trust me I have done a lot of google-ing!)

In my full time employment I work at the office. In my sole employment I work purely at home but only do a couple of hours a day - so I do think I can claim on it - but from what I have googled because the room is not exclusively for my application I have to take into account how long it is used for both leisure and work.

Thanks everyone for your help.

Ross