Self Assessment - Capital Allowance Question

Bennage

Hi all,
I am finally about to submit my tax return, but I have a few questions first. I'm a bit of a newb when it comes to all things SA as I only recently registered as self employed.

The background:
- I registered as self employed at the beginning of 2012 (February).
- I was employed full time and being paid PAYE until leaving and going freelance in April 2012.
- I made a major purchase in Feb '12 costing approx. £8,000 that can be classed as a Capital Investment with 100% claimable.
- In 2011-2012, I made around £22,000 from the PAYE employer only. Nothing made on the freelance side of things.

- I have completed (but not submitted) the tax return and it says I owe a few pennies in tax.

Questions:
What is the best way to use this capital investment?
Do I get a tax refund of £8,000?
Do I claim it in the next year's Return when my freelance profits will be greater?

Anything else that springs to mind?


Many big thanks in advance,


b

nomunnofun

I think that something does not quite compute.

If the AIA due is £8000, for you to 'owe a few pennies in tax' you would have to otherwise made a PROFIT of £8000 or so in the months of February and March 2012 alone! Have you claimed this in your tax return to date or are you now considering whether or not to claim it?

You will not get a refund of £8000 but, depending on the above, can receive tax relief of £8000. If the claim means that you now have a loss of £8000 or so this can be set against your PAYE income and you should receive a refund of £2000 approx.

If you do not claim it in 2011/12 you will only be able to claim a writing down allowance in future years i.e never the £8000 in any one year.