How To Calculate Car And PC Expenses for Self Employment

Strike_Team

I'm currently self-employed. Earlier this year I built a new PC for business use. I also bought a new car, which I use for both personal and business purposes.

How do I go about determining what expenses I can charge on the car and PC?

Do I simply charge the full cost of the PC, and an anppropriate proportion of car costs according to mileage or what?

malcindebt

These will be calculated as Capital Allowances.

Take the cost of the computer- its whole cost but not including software other than OS. then calculate 40% of this. This is the value you can claim in this tax year. i.e. cost £1000 x 40% = £400. Claim 400 this year, then next year you claim 25% of the value thats left. i.e. £1000 - £400 = £600 (this is known as the pool) x 25% = £150. This trend continues until the computer is sold, or is scrapped.

almost the same thing happens with the car, but once you have calculated the allowance at 40% or 25%, you then have to allow for personal use, so if it is 50/50 it would be as follows for the first year.

Cost £10000 X 40% = £4000 X 50% = £2000. Claim 2000 as the allowance.

cash99

malcindebt wrote: »

almost the same thing happens with the car, but once you have calculated the allowance at 40% or 25%, you then have to allow for personal use, so if it is 50/50 it would be as follows for the first year.

Cost £10000 X 40% = £4000 X 50% = £2000. Claim 2000 as the allowance.

You can only claim 25% up to a maximum of £3000 per annum on a regular car. Other rules may apply if it is a van or low C02 car.

If you are talking about a reasonable size business the professional tax advice will probably pay for itself in tax savings.

cosyc

malcindebt wrote: »

These will be calculated as Capital Allowances.

Take the cost of the computer- its whole cost but not including software other than OS. then calculate 40% of this. This is the value you can claim in this tax year. i.e. cost £1000 x 40% = £400. Claim 400 this year, then next year you claim 25% of the value thats left. i.e. £1000 - £400 = £600 (this is known as the pool) x 25% = £150. This trend continues until the computer is sold, or is scrapped.

almost the same thing happens with the car, but once you have calculated the allowance at 40% or 25%, you then have to allow for personal use, so if it is 50/50 it would be as follows for the first year.

Cost £10000 X 40% = £4000 X 50% = £2000. Claim 2000 as the allowance.

Unfortunatly your rates are a bit out of date for 2005-06 and 2006-07 you can claim 50% as a first year allowance. The word 'claim' doesn't mean you get it back from the tax office, you are claiming it as an expense. So if you make a profit under tax free allowance or a loss, and have no other taxbable income then it's not always worth claiming just caarry forward the ful balance to next year but only calim at 25% next year.