Claiming capital allowance

caverncity

Hi I have never claimed for capital allowance on my self employed (sole trader) tax return however I want to this year. I have searched and found many answers but not what I feel is the one I think helps me. Basically I want to claim for three items that are tools for my business totalling £170. Now do I claim for the full £170 as it is below £1000 and then reduce that each year until there is nothing to claim for and if that is correct what percentage do I reduce it by each year.
Also on another note I wanted to claim for my broadband because my business is conducted solely over the net but the tax man said I cant claim for it because I work from home and he said the internet can be used by any of the family inc myself for personal use so no.

thanks for your help

Elaine_Wilson

To be honest, if the three items only add up to £170 I would be inclined to include them in replacement of tools and not bother with capital allowances. However, it doesn't take much to follow the correct procedure.

As capital items you can claim the Annual Investment Allowance. This can be any figure up to 100%, so £170 maximum. If you claim the whole lot then there is no further claim on these items in future years. If you decide to only claim part then the balance unclaimed is added to what is called a "general pool" and carried forward. This figure would be reduced in future years except that, as you have noted, a figure below £1,000 can be written off in one go.

As for the broadband cost I am not happy with the response you have reported. I hope the adviser asked further questions about your business. Can you realistically run your business without broadband? If not, then I would suggest any private use should be treated as "incidental" and you would then be able to claim the whole of the cost in your business.

When considering the private use the number of hours the family use it is not, in my opinion, very important. The important thing is that the business could not be carried out without it, and it is available for business use whenever it is required. Also, the private use should not incur any extra charges or these will obviously not be allowable.

mlz1413

Agree with EW why not claim all this year within the profit & loss rather than something like 20% / £34 for 5 years?

I'd also go back and query the broadband charge, if you pay a fixed fee say £25pm than why can't you at minumum have say 80% business usage to 20% private? or whatever % you consider correct. Google search BIM47820 - this will take you to HMRC specific deductions: use of home, telephone & broadband are covered

taxing

Hi

Agree that £170 is R&R expense for accounts; end of.

Re. broadband - it's the chicken & the egg isn't it. If you already had broadband in the home and have extended the use to business then I would go on a reasonable percentage claim - based on usage.

However, if you didn't have it at all and needed to buy it to make your business more efficient (viable etc etc) then, yes, 100%: private use would be arguably incidental.

Regards.

caverncity

Hi many thanks for your replies, I understand the claim and how it works a lot more now, just a shame the tax office didnt explain it more clearly as you have. I do my own books and am now paying more tax so want to get it down as much as possible. I think next year I may have to pay for an accountant.
With regards to the BB it was already in and the family do use it as well, at a guess approx 25% however without it I couldnt run my business at all so I will see what they say, I have already submitted this years returns so too late there. I did read that you can back date it 5 years or is this incorrect?
thanks

John_Pierpoint

http://www.hmrc.gov.uk/about/deadlines-taxpayers.htm