Business Set up costs...before business starts

Torby

Over this last year I have been slowly moving towards setting up my own business i.e. self employed....knowing money is tight when you don't get any government assistance to set up....I have been buying (all be on credit cards...lol) equipment I knew I would need....now it looks as if the business wont really start until the next financial year....is there such a thing as "pre trading" costs, i.e. can I claim capital allowances for items that were purchased in the tax years before I start my business....blimey when I read this and see just how little knowledge I have on the subject I wonder am I doing the right thing....

Pennywise

Torby wrote:

Over this last year I have been slowly moving towards setting up my own business i.e. self employed....knowing money is tight when you don't get any government assistance to set up....I have been buying (all be on credit cards...lol) equipment I knew I would need....now it looks as if the business wont really start until the next financial year....is there such a thing as "pre trading" costs, i.e. can I claim capital allowances for items that were purchased in the tax years before I start my business....blimey when I read this and see just how little knowledge I have on the subject I wonder am I doing the right thing....

No, all "pre trading expenditure" is deemed to have been bought on the first day of trading so tax relief (on capital allowances for equipment) is claimed in the first period of trading. If you havn't started trading, then no relief until you do. Can you not start a very small amount of trading just to get a small amount of income, then you can official "start" on your tax returns and claim th expenses?