New Computer Tax Deductible?

SH88

Hello.
I'm registered as a sole trader and file a Tax Return every year.
This is the first year I will be purchasing a new Laptop to use for my self employment, as well as some software licenses.

When filing my Tax Return, can I deduct the full value of these items?
Or is it calculated somehow?

It's been a while since I completed the last return and can't remember whether or not there was a section for it, or how it was calculated.
Thanks in advance for any help.

BoGoF

First of all, are you buying it for 100% business use?

SH88

Yes, this new machine and any licenses will be used solely for self employment.
My current computer will be kept for personal use.
Thank you for the speedy reply.

uknick

You have two choices. Write the business element of the cost (from what you've said is all of it) all off in year of purchase as an expense. Or, write it off over its business life using writing down allowances.

Look here for more information on the allowances;

https://www.litrg.org.uk/tax-guides/self-employment/working-out-profits-losses-and-capital-allowance/what-capital-allowances

and

https://www.gov.uk/capital-allowances

If the laptop is only a few hundred £, I'd treat it an expense in year of purchase.

SH88

Ok I see. Thank you for posting.

I have annual software licenses and monthly software licenses too.
Are these able to be treated as expenses as well? Or must they be one-off payments to qualify?

Thank you for the links. Will give them a read.

Pennywise

If you've adopted the simplified cash basis, you treat it all as expenses and claim tax relief in year of purchase - no choice.

If you've not and are using the normal/accruals basis, you can choose to capitalise and claim capital allowances instead, which gives you the option of writing it all off in year of purchase, or not claiming it all, and claiming writing down allowances over several years instead. It would depend on whether you need to claim it all in year of purchase - sometimes if your profits are low you may lose out by claiming all at once.

SH88

Ok great. Thank you for the explanation.

Finally just to clarify, can I claim in these expenses the Software that I pay monthly for, like Adobe, (which you pay for as long as you use, so never truly own)?.

Thanks again for your help.
I really appreciate it.

Pennywise

SH88 wrote: »

Ok great. Thank you for the explanation.

Finally just to clarify, can I claim in these expenses the Software that I pay monthly for, like Adobe, (which you pay for as long as you use, so never truly own)?.

Thanks again for your help.
I really appreciate it.

Yes, as long as it's used wholly for business.

TheCyclingProgrammer

Pennywise wrote: »

Yes, as long as it's used wholly for business.

If the sole *purpose* for purchasing the software and computer was for business reasons (e.g. OP cannot do their job without it) but then there was subsequently some minor personal use, would this need to be apportioned or can sole traders benefit from some kind of rule similar to the "insignificant personal use" rule for employees using employer-supplied equipment?

uknick

You might want to look at this link.

https://www.gov.uk/guidance/help-and-support-if-youre-self-employed

The webinars are pretty straight forward and the questions asked during them cover a lot of the issues you've been asking about.