Profits,working tax and capital allowance

paul31_2

Looking for a little bit help with a few questions i have please.I made £15768 working self employed as a builder,had expenses consisting of £2170 consisting of mileage and insurance.I also have tools to the value of £270,am i rite in thinking that i need to deduct the expenses portion to find my profit amount?This is in relation to my tax credits renewal pack and them wanting to know my total profit for the year.My second question relates to the tool expenses i have,my understanding is these are classed as a capital allowance is this correct?this in relation to my self assesment.Thanks for any advice.

Pennywise

It's easier to do your sa first as the "net taxable profit" from the SA return is the figure you need for your tax credit renewal. The tools are indeed capital allowances, so you need to put the figure in the CA box rather than a trading expense box.

John_Pierpoint

But you will get instant write off on an amount like that with that level of turnover !?

paul31_2

John_Pierpoint wrote: »

But you will get instant write off on an amount like that with that level of turnover !?

I assume you meen the tool money will be wrote off?if so why is this?Not to clued up on all this rebate lark.Thanks for the replies.

John_Pierpoint

Here is a thread from someone with a very similar situation to yours.
https://forums.moneysavingexpert.com/discussion/3180974

The tax man does not want to be bothered with policing modest self employed people having to set up pools of capital investment; as they write of a bit of this capital investment each year against tax.

The government changes the rules, on how much can be invested in capital assets and "freely depreciated" (ie at 100%) each year, in an attempt to get worried business men to go out and buy tools and machinery from other worried business men, during a recession.

Now is quite a good time to invest and claim tax back on the amount spent.

However there are special rules that apply to cars as against vans, probably because the tax man got fed up with farmers going out and buying new Volvos every time there was a good harvest.