Self !!! - What can I claim back?

csa

Hi,

I occasionally do some IT training and earn about 1/2k pa. On my self assessment form I only claim back the basic travel expenses and electric/heating costs etc. However as I work with computers, I am always needing to buying equipment (Adobe Cloud, Windows 7 etc)...now I would put these down within my additional expenses but I haven't purchased these as yet...but need to ASAP. I've noticed there is a section within my SE which is Investment Allowance. Could someone please explain this to me? I'm not sure if I will remain SE for 2013/14 so it may not be worth my while adding anything here?
Thanks

Pennywise

Anything you buy purposely for your self employment will be allowed as an expense, except for any private/non business use.

So if you buy some software that you'll only use for business, it's 100% allowable. If you buy a computer system including OS software that you'll use, maybe 10% of the time for business, you claim 10%, the other 90% being personal and not allowable.

Assets, including software, that have an expected life of over a year aren't an "expense" - they're capital purchases. At the moment you can claim 100% annual investment allowance, meaning the same tax effect as if you claimed them as an expense. General consensus is to treat lower cost items as an expense anyway, say £250 or less, but different people have different limits. It doesn't really matter as the tax relief is the same - just different box on the tax return.

But, to be clear, you don't get the full cost off your tax, the cost comes off your income, and then you're taxed on the lower amount. So if you pay tax at 20%, then spending £100 on software will reduce your tax bill by £20.

csa

Thanks, helpful advice.