please help with capital allowances

bubble96

hello,am hoping someone can help. this is my second tax return i am a very small photographic business and am struggling to understand capital allowances. #

i know that it is for the larger items such as cameras etc, and i know i can only claim percentage in terms of business use, however i am struggling tyo understand what i have to do this year as i only claimed part last year or something for a camera and i remember her saying something about carrying forward the rest? does anyone have a clue what im going on about?

also where does training fall, is this just a business expense. And what about smaller items like cf cards?

thanks in advance, the SA helplines are jam packed!

Rolo_Tomasi

CF cards would be classed as renewals and included in your profit and loss account.
Training is a little more difficult as it depends on what the training is for. If it is to maintain your existing knowledge then it is probably an allowable expense for your business however if you gain new skills from it then it is not.
Not really sure what your asking about capital allowances but perhaps the following example will help:

If you purchased a camera solely for your business in June 2007 and it cost £3,000 then you would have probably claimed 50% of this on your 2007-08 Return. The amount not claimed is therefore £1,500 and this is carried forward to you 2008-09 Return. You then claim 20% of £1,500 in 2008-09 (£300) which leaves £1,200 to carry forward to the following year. You carry on claiming 20% each year until you no longer use the camera in the business.

The rules did change during April 2008 and therefore items purchased after this date will come under the Annual Investment Allowance rules.

bubble96

thank you this was very helpful

anyone know anything about where to put training?

and also where will i find info on Annual Investment Allowance rules? anyone have a good link?

PlutoinCapricorn

Legitimate training costs get added to the general expenses as they are not tangible items.

If the training is in a completely new skill just done in the hope of getting work one day, then it is not allowable. For example, if a security guard takes a plumbing or gardening course, this is not deductible from his security business expenses. A course that is essential for keeping up with the security world is deductible. Uniform cleaning, professional subscriptions and memberships: no one would incur these costs for personal reasons, they are legitimate business expenses and should be claimed to reduce the tax payable.

A capital item is something that lasts many years and costs more than a certain amount - this could be around £250. A stapler may last for decades, but it goes in the general expenses as it costs very little. When people do not need to list their expenses separately, they do sometimes put a few things in that strictly speaking should be capital items, a £400 laptop for example.

bubble96

ok thanks very much this is all helping to clear things up in my head!