Capital allowance on a computer

bonnerbob

hi all, can some one please help me with a quickie... It's my first year in self assessment and when I started out I,ve took a computer into my business that used to mine. I'm looking to to claim this a expense against my profits. Can I do this? And can I claim the full amount or just a percentage?

Thanks in advance everybody!

chrismac1

Yes, if you are using it in your business you can claim the business proportion. Depending on the value you'd either claim it as a capital addition and then claim capital allowances, or if of lower value take it direct to expenses under "Equipment expensed".

If you are running a limited company, the other side of the entry is Director's loan - if a sole trader then Capital Employed.

HappyMJ

Yes, you raise an invoice for just a bit less than the purchase price to the business (so you don't make a profit on the sale) and the business can claim it all (as long as it's not too much)..lots of stuff to read on the hmrc website.

MrRedundant

Tbh I suspect your wasting your time unless its a massively expensive computer even considering capital allowances as due to the previous use you would needto capitalise it and write it down rather than use your AIA.

How much are we talking and what is the business/personal use? What sort of value would you propose to deduct? I suspect your problem would be justifying this to include it.

Of course if you went out and brought a brand new one you could deduct the entire amount as AIA

bonnerbob

Thanks everybody, I'm a sole trader and was thinking of claiming £600....(originally it was £900), I use it solely for work.....so am now thinking of just putting it as a AIA as a expense.....does that sound right?

MrRedundant

No
You cant do it as an AIA expense as it was owned by you and transferred into the business. If you had bought it for the business you could have.

How old was it at the time of transfer? How do you justify the £600? The WDA means you would capitalise the asset and allow for £120 in your accounts as a WDA.

I have to be honest if I was you I wouldn't bother as its not going to save you much tax wise and may be hard to justify if scrutinised and just wait til replacement time before worrying about capital allowances etc.

What is the turnover of your business? Is £600 a large spend for it? If not you could maybe expense it but this might be a stretch.

bonnerbob

I looked up second hand ones on eBay to justify the cost.... The turnover was small the first year about 12k, so just trying to bring the tax bill down.... What's the smallest amount you think I could claim this as a expense....and would it change things if I told you I actually did buy it with the business in mind

MrRedundant

Your intent doesnt really matter. It was either bought by the business and qualifies or wasn't.

Read up on small pools allowance which may apply. I can't remember the ins and outs but it is meant to allow small amounts (less than 1k) to be full written down in 1 year therefore you could deduct the full £600 under this.

That said I don't remember the qualifying criteria in depth so google it and beware.

Choosing whether to capitalise assets in future is something you should seek advice on and set a limit. If your turnover is that low I'd be looking at a threshold of say £200 (ish) for equipment etc.

You should be able to relieve most of it in one year and have zero asset pools using your AIA.

bonnerbob

Thanks mr redundant... I'll google all that now

chrismac1

Personally I would claim the £600 as "equipment expensed" and argue that it was pre-trading expenditure without which the business would not be able to operate and hence no 20% of the 12,000 to hand over.