Questions about tax free expenses - self employed tax return...

Hi

Sorry for any stupid questions, I'm not sure why I can't find the answers I need, I must be missing something. I am a videographer/photographer/composer. This last year I only made £14,000, and the tax free allowance is £12,570, so I would owe tax on £1430.

I have bought quite a lot of things this year for my business - A Laptop worth £5000, a camera and lens worth £3000, and lots of software for composition worth about £2000.

Are all these things able to be deducted and can they somehow be spread over multiple years, not just the tax year I bought them?

Can I carry any of these tax free allowances forward to next year, and how? Because it's a lot of money I spent!

Thank you very much

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  • Jeremy535897
    Jeremy535897 Posts: 10,385
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    They can all be claimed, although if there is any private usage, the amount claimed can only be the business proportion. Do you prepare your accounts on the cash basis? If you do, you claim for these items in the year you paid for them. You can't claim part. If you prepare accounts on the traditional basis, you can treat at least the laptop and the camera as assets qualifying for capital allowances. Claim what you need to in the year you bought them, and carry the balance forward (but you can only write that down at 18% per annum). The software would normally just be claimed like any other business expense. See https://www.gov.uk/capital-allowances
  • delmonta said:

    Hi

    Sorry for any stupid questions, I'm not sure why I can't find the answers I need, I must be missing something. I am a videographer/photographer/composer. This last year I only made £14,000, and the tax free allowance is £12,570, so I would owe tax on £1430.

    I have bought quite a lot of things this year for my business - A Laptop worth £5000, a camera and lens worth £3000, and lots of software for composition worth about £2000.

    Are all these things able to be deducted and can they somehow be spread over multiple years, not just the tax year I bought them?

    Can I carry any of these tax free allowances forward to next year, and how? Because it's a lot of money I spent!

    Thank you very much

    You cannot carry forward any unused Personal Allowance.

    And as far as business expenses are concerned a lot will probably depend on whether you use cash basis accounting or not.

    You may find this a useful read.

    https://www.litrg.org.uk/tax-guides/self-employment/what-business-expenses-are-allowable/what-capital-allowances-can-i-claim
  • The software, in my view, can be claimed as an expense which would bring the profit to 12000. Accordingly it would be silly to claim anything on the laptop and camera this year. 

    As said previously, carry this expenditure forward and claim 18% next year, 18% of the remaining balance the following year and so on ……
  • delmonta
    delmonta Posts: 487
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    They can all be claimed, although if there is any private usage, the amount claimed can only be the business proportion. Do you prepare your accounts on the cash basis? If you do, you claim for these items in the year you paid for them. You can't claim part. If you prepare accounts on the traditional basis, you can treat at least the laptop and the camera as assets qualifying for capital allowances. Claim what you need to in the year you bought them, and carry the balance forward (but you can only write that down at 18% per annum). The software would normally just be claimed like any other business expense. See https://www.gov.uk/capital-allowances
    Thanks yeah I do my own tax return on a cash basis as it makes the most sense and is simplest in my situation. So you say it's not possible to claim only part if I do it this way. 

    So the only way to spread these costs over multiple years is to switch to traditional? 
  • delmonta
    delmonta Posts: 487
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    edited 22 January at 2:51PM
    The software, in my view, can be claimed as an expense which would bring the profit to 12000. Accordingly it would be silly to claim anything on the laptop and camera this year. 

    As said previously, carry this expenditure forward and claim 18% next year, 18% of the remaining balance the following year and so on ……
    Thanks, this is what I'm confused about. If I am doing Cash basis then I can only claim in this tax year? 

    You say it would be silly to claim anything on the laptop and camera this year, do you mean I could claim for them next year even if I bought them this year? Can it work like that

    I've read so many things online, I don't know why I'm finding it hard to find clear info on this, I must be missing something! 
  • delmonta
    delmonta Posts: 487
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    delmonta said:

    Hi

    Sorry for any stupid questions, I'm not sure why I can't find the answers I need, I must be missing something. I am a videographer/photographer/composer. This last year I only made £14,000, and the tax free allowance is £12,570, so I would owe tax on £1430.

    I have bought quite a lot of things this year for my business - A Laptop worth £5000, a camera and lens worth £3000, and lots of software for composition worth about £2000.

    Are all these things able to be deducted and can they somehow be spread over multiple years, not just the tax year I bought them?

    Can I carry any of these tax free allowances forward to next year, and how? Because it's a lot of money I spent!

    Thank you very much

    You cannot carry forward any unused Personal Allowance.

    And as far as business expenses are concerned a lot will probably depend on whether you use cash basis accounting or not.

    You may find this a useful read.

    https://www.litrg.org.uk/tax-guides/self-employment/what-business-expenses-are-allowable/what-capital-allowances-can-i-claim
    Thanks I read that link. I'm still confused...if I stick with Cash basis (which makes sense in my circumstances) as someone else mentioned I can't carry used expenses forward to next year. But can I for example - claim this just for  a lens to bring my tax down under the threshold, and then next year claim for the laptop, even though the laptop was bought this year?

    This is what I'm mostly confused about

  • uknick
    uknick Posts: 1,611
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    No, you can't claim expenses in the tax year that suits you best.  If using cash based they must be claimed in year of spend, if accrual based spread over their life through use of capital allowances.

    I'm not really sure where the confusion is coming from.

    What you can do, if you're cash based, is delay invoicing customers so the invoice receipt falls in the tax year which suits you best.
  • delmonta
    delmonta Posts: 487
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    uknick said:
    No, you can't claim expenses in the tax year that suits you best.  If using cash based they must be claimed in year of spend, if accrual based spread over their life through use of capital allowances.

    I'm not really sure where the confusion is coming from.

    What you can do, if you're cash based, is delay invoicing customers so the invoice receipt falls in the tax year which suits you best.
    Thanks, sorry any confusion just comes from my lack of knowledge, but a lot of googling hasn't helped me much!

    So the only way to spread expenses over the years is to change from Cash basis to accrual basis. I have always used cash basis and been told that's best for my situation, so I was reluctant to change. I am wondering if it would be worthwhile me changing just for this, as in the future I doubt I'll have as many high expenses in one year
  • I think that you are getting confused. 

    I my previous post I stated that it would be silly to claim capital allowances on the two items which are designated as capital because your profit is already below the personal allowance. 

    Accordingly you CAN claim NIL capital allowances on the laptop and camera this year and CARRY FORWARD the full cost to the following year as I explained earlier - read that post again. 

    Given the questions are you absolutely certain that what you submit to HMRC will be correct? If not, I would strongly recommend that you seek professional assistance. Their fee could save you more in the long run!
  • delmonta
    delmonta Posts: 487
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    edited 22 January at 2:51PM
    I think that you are getting confused. 

    I my previous post I stated that it would be silly to claim capital allowances on the two items which are designated as capital because your profit is already below the personal allowance. 

    Accordingly you CAN claim NIL capital allowances on the laptop and camera this year and CARRY FORWARD the full cost to the following year as I explained earlier - read that post again. 

    Given the questions are you absolutely certain that what you submit to HMRC will be correct? If not, I would strongly recommend that you seek professional assistance. Their fee could save you more in the long run!
    Thanks and sorry I really need to brush up on all this. What you are talking about doing requires me to not use cash basis for my accounting. That was my concern

    But thanks and yes I could get an accountant but I am not making that much money and it's fairly simple, maybe 10 invoices for the year, so I don't see much reason to get an accountant, apart from just understanding the best way to deal with these expenses
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