AIA for Self Employed Sole Trader - Can You Carry It Forward?

Maharishi

Hello Learned Forum, just about to submit my return and wondering what to do regarding the following;

My net profits will be circa £11500 but I have a single purchase of an iPad which was almost £800, that is used solely in the business.  With that profit figure above, I am not going to have a liability so what is the best thing to do with regard to the purchase?  Should I;
a) Add it to my pool and take the WDA 18% in years that I make that claim or
b) Do nothing with it and then claim the full amount in AIA during a subsequent return (assuming that is possible)?

And if it's "b" then is there an upper time limit?

Thanks to whomever knows the answer.  Kindest regards,

M

uknick

Are you sole trader or Ltd?  If sole trader, cash or accrual accounting?

If you are eligible for capital allowances, they are are taken in the year in which the purchase is made.

More detail here;

Claim capital allowances: Annual investment allowance - GOV.UK (www.gov.uk)

which answers your question regarding the iPad and low profits. 

Jeremy535897

Don't use the cash basis, and then add it to your pool for future WDA at 18%.

Maharishi

uknick said:

Are you sole trader or Ltd?  If sole trader, cash or accrual accounting?

If you are eligible for capital allowances, they are are taken in the year in which the purchase is made.

More detail here;

Claim capital allowances: Annual investment allowance - GOV.UK (www.gov.uk)

which answers your question regarding the iPad and low profits. 

Sole trader.  The link told me exactly what I needed to know.  However, what would one do in the event that a purchase was missed from that year's AIA in a genuine error?  Have you "lost" the ability to claim it upon discovering the mistake or ..?

Maharishi

Jeremy535897 said:

Don't use the cash basis, and then add it to your pool for future WDA at 18%.

Yep.  Got it.  Thanks.  However;

With my business declining year on year (musician/entertainer), my WDA pool (currently standing around £3k), hasn't had the 18% claimed for a few years now (as under the personal allowance), and as I will probably stop trading within 2/3 years, would that just come into play on a final return?

BoGoF

Maharishi said:

Jeremy535897 said:

Don't use the cash basis, and then add it to your pool for future WDA at 18%.

Yep.  Got it.  Thanks.  However;

With my business declining year on year (musician/entertainer), my WDA pool (currently standing around £3k), hasn't had the 18% claimed for a few years now (as under the personal allowance), and as I will probably stop trading within 2/3 years, would that just come into play on a final return?

Are you ever going to be in a position to claim WDA. If your level of profit before CA'S remains under the personal allowance then it is somewhat academic if you can carry forward.

Maharishi

BoGoF said:

Maharishi said:

Jeremy535897 said:

Don't use the cash basis, and then add it to your pool for future WDA at 18%.

Yep.  Got it.  Thanks.  However;

With my business declining year on year (musician/entertainer), my WDA pool (currently standing around £3k), hasn't had the 18% claimed for a few years now (as under the personal allowance), and as I will probably stop trading within 2/3 years, would that just come into play on a final return?

Are you ever going to be in a position to claim WDA. If your level of profit before CA'S remains under the personal allowance then it is somewhat academic if you can carry forward.

Probably not.  I have only needed to claim it 4of the last 10 returns.  However, I do now get a partial state pension (29/35) so that comes into play, AND I am looking for a part time 2 days a week job.  So looking forward, if I earn elsewhere, albeit small, I will be taxed on it and a lower profit from the SE would surely assist in getting some/all of that tax rebated?

Jeremy535897

You don't need to claim the 18% either. Just carry the pool forward until you need to use it, then take 18%.

Maharishi

Jeremy535897 said:

You don't need to claim the 18% either. Just carry the pool forward until you need to use it, then take 18%.

Makes sense.  Thanks Jeremy.

Maharishi

EDIT.  Just completed my return and all went very smoothly with no alarms.  Couple of things:

1. My pension was indeed pre-populated (as previously advised)
2. My short term PAYE employment was ALSO pre-populated (correctly)
So all I had to do was work my was through the form, page by page, as in previous years.

One tip for other sole traders that do their own Self Assessment is this:-

Each year as I do my return, I screenshot every page after I have completed it, and save the images in a folder.  Then when I come to file the following year, I have those images open so that I know what goes where.  Sure, the form changes every year, but it helps me to get things where they should go and so avoid editing after the fact.

Thank you all who assisted me.  I am eternally grateful for the learned minds on this forum.