Self Assessment questions

supern00b

Whilst I try hard (honest) frankly self-assessment is the most frightening time of the year. I did my first one last year, but would like to clarify one or two points if possible. I'd appreciate your help and am aware that this will probably be one of a thousand questions this forum will get at this time

Ok so...

On the subject of capital allowances. Let's say if I bought a computer last year for £500, claimed it as expenditure under capital allowances, but then sold it the next year for £200, does this need to be included somewhere or am I getting to unnecessary detail. If it does need to be calculated, where should this go?

On the subject of expenses/income in foreign currency, at what exchange rate need this be calculated? Can you do it by today's rate/monthly average rate/daily average rate?

Whist I have receipts, I tend to find that given the vast vast majority of expenditure goes through card payment or indeed bank transfer (for ease of referrence) is bank statement evidence sufficient to support claims? It would strike me as odd that in 2011 bank statement would be insufficient without a paper receipt from POS. Thoughts? (*crosses fingers that bank statements are fine)

Many thanks!

eyeofthetyne

supern00b wrote: »

Whilst I try hard (honest) frankly self-assessment is the most frightening time of the year. I did my first one last year, but would like to clarify one or two points if possible. I'd appreciate your help and am aware that this will probably be one of a thousand questions this forum will get at this time

Ok so...

On the subject of capital allowances. Let's say if I bought a computer last year for £500, claimed it as expenditure under capital allowances, but then sold it the next year for £200, does this need to be included somewhere or am I getting to unnecessary detail. If it does need to be calculated, where should this go?

On the subject of expenses/income in foreign currency, at what exchange rate need this be calculated? Can you do it by today's rate/monthly average rate/daily average rate?

Whist I have receipts, I tend to find that given the vast vast majority of expenditure goes through card payment or indeed bank transfer (for ease of referrence) is bank statement evidence sufficient to support claims? It would strike me as odd that in 2011 bank statement would be insufficient without a paper receipt from POS. Thoughts? (*crosses fingers that bank statements are fine)

Many thanks!

With regards to the computer, if you are claiming it as a tax deductible business expense (£500) then you are declaring it as soley for business use, therefore it is a business asset. If you sell it for £200 you then need to declare that £200 as income for your business, as you have sold an asset.

With regards to your purchases and evidence needed, bank statements are usually not enough, and you need proper VAT receipts from the place of sale to show what exactly the item is you have purchased.

I hope this helps :cool:

supern00b

Don't suppose it helps if I'm not VAT registered does it?

eyeofthetyne

supern00b wrote: »

Don't suppose it helps if I'm not VAT registered does it?

No I'm afraid not. You will only be asked for evidence of receipts if you are investigated, which does happen to people randomly. Remember to keep receipts for everything you buy for the business, keep a folder at home and in the car and just shove everything in there, then when it comes to tax return time you can either go through everything (and have a nice surprise as to how much you have actually spent on your business) or give it to your accountant if you have one.

It is a learning curve, I remember in my 1st year of business I could not claim for a lot of things as I had forgotten to keep receipts. Since spending a lot of time researching and learning about tax I'm now far more efficient.

ceeforcat

Not strictly correct eyeofthetyne - the sale of the computer is not income and must not included in turnover.

It is a balancing charge on capital allowances (Value £500 less claimed £500 = net value to claim =0) But the op has sold it for £200 and made this as profit. Effectively this is treated as a minus Capital allowance figure. Probably the simplest way of explaining this.

John_Pierpoint

eyeofthetyne wrote: »

No I'm afraid not. You will only be asked for evidence of receipts if you are investigated, which does happen to people randomly. Remember to keep receipts for everything you buy for the business, keep a folder at home and in the car and just shove everything in there, then when it comes to tax return time you can either go through everything (and have a nice surprise as to how much you have actually spent on your business) or give it to your accountant if you have one.

It is a learning curve, I remember in my 1st year of business I could not claim for a lot of things as I had forgotten to keep receipts. Since spending a lot of time researching and learning about tax I'm now far more efficient.

Beware of those tills that produce a receipt that looks like a baby thermal fax machine output. They can fade to nothing or go completely black - I photocopy mine before bunging them in the file.