Claiming back cost of PC

Premier_2

You can depreciate in any way that is deemed reasonable and appropriate

Straight line depreciation is common especially for computers. so if depreciating at 25% per year and the pc cost £400
Year 1 is £100
Year 2 is £100
Year 3 is £100
Year 4 is £100

This means that after 4 years the pc is deemed worthless - which it probably effectively is. Companies often replace their IT equipment every 4 years or so.

Using the method in post #4 would mean you were still carrying a book value of £1.25 after 20 years. That may not be apprpriate because (a) the equipment may not be expected to last that long and (b) even if it does, who do you know that will then be willing to buy it off you?

If you believe the pc will only last 3 years, depreciate at 33.3% etc

steve1980

Premier wrote: »

You can depreciate in any way that is deemed reasonable and appropriate

Straight line depreciation is common especially for computers. so if depreciating at 25% per year and the pc cost £400
Year 1 is £100
Year 2 is £100
Year 3 is £100
Year 4 is £100

This means that after 4 years the pc is deemed worthless - which it probably effectively is. Companies often replace their IT equipment every 4 years or so.

Using the method in post #4 would mean you were still carrying a book value of £1.25 after 20 years. That may not be apprpriate because (a) the equipment may not be expected to last that long and (b) even if it does, who do you know that will then be willing to buy it off you?

If you believe the pc will only last 3 years, depreciate at 33.3% etc

That's great, thanks for that. I would expect to replace every three years anyway so I'll use the 33% rule.

malc_b

Are you sure on this? AFAIK HMRC set the depreciation rates. Yes you can depreciate at any rate you like for the company accounts but you then have to add it back it and work it out HRMC's way in order to work out tax. Anything else would be anarchy with every company depreciating how they liked. In any case for a PC the amount is under the total of any one year limit so just claim the lot.

seismicryan

I had previously used the 25% rule... 25% of the residual value essentially, which someone mentioned earlier.

But from what I understand you can claim the full value for such items on your accounts in the first year up to 50k..?

If, as in the example a couple posts up you claim £100 for each of 4 years on a £400 purchase, how does this differ from claiming the full £400 in the year of purchase?

Ryan

Pennywise

You can depreciate at whatever rate you think right. That's nothing to do with tax relief though.

For tax relief, you have to follow HMRC's rules for capital allowances. You have two choices. Claim Annual Investment Allowance of 100% in the year of purchase, OR, claim 20% p.a. reducing balance capital allowance which will take several years to claim.

There are NO other options for tax relief.

Talking about depreciation is a red-herring. That's for accounts only, not for tax relief!

malc_b

There is also new the small pool rule so you can write off the whole pool in one year if it is less than £1000. Useful if you have already put a PC into the pool last year for example.