Little question regarding business expenses for sole traders/self-employed
- Thread starter Zbornak
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Soldato
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Yes.
No
The expense should be accrued in the year it was incurred - that being when the Laptop was purchased.
You could claim that the business didn't have use of it until the following year, when the expense was claimed, but then you would need to reduce the expense claim to take account of the fact that the business was buying a used laptop from you as an individual.
The expense should be accrued in the year it was incurred - that being when the Laptop was purchased.
You could claim that the business didn't have use of it until the following year, when the expense was claimed, but then you would need to reduce the expense claim to take account of the fact that the business was buying a used laptop from you as an individual.
Soldato
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I don't have limited company, I am a sole trader. You think I should wait 'til April to buy it?
Thanks but as per usual the HMRC website isn't very comprehensive.
Soldato
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What happens if you do company mileage/buy something on 31st March?
As a sole trader, the business and the person are the same entity.
Soldato
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Laptops are not simple expenses in the way a bill is.
Are they not a capital expense?
You write down part of the cost of the laptop each year over a number of years from what I recall, rather than take all of its value out in the initial year.
Surely your accountant is the person to phone and ask regarding this.
Accountant? Many sole traders don't use one.
Then it goes in the accounts which include that day, regardless of when you make the claim.
As for the laptop, buy it now. It's actually a capital expense, meaning it doesn't all go against profits in the year it's purchased, but is instead written off over its useful economic life (UEL). You charge depreciation, basically.
Assuming 3 year UEL, buy it now any you would include 1/36th of the cost as an expense in your 31st March 2014 accounts, followed by 12/36ths next year, then another 12/36ths, then the remaining 11/36ths.
The tax side of it is a bit different. The laptop purchase gets added to your "Pooled assets"You can usually write off 18% of your total "pool" per year against your taxable profit (writing down allowances - WDA), regardless of when in the year you purchased additions. If your total balance of your pool is less than £1,000, you can opt to claim the whole amount in that year against profits.
My new (and first) accountant has recently passed away and I haven't got a new one yet so I'm doing it amateur stylee for the time being.
Soldato
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If you don't understand the tax system and its implications, then you shouldn't be filing your own tax return.
I file returns for my mother and father, as I understand all aspect of their accounts and tax liabilities.
I don't understand all aspects of my own situation, so I employ an accountant (tax deductible) to do my own submission.
OP, I'd wait till April to purchase if you want it within that year, but check if a capital expense is what it is classes as, and if it is a single deduction, or is written down over time.
I would have thought this to be honest. The whole point of the allowance is to entice capital expenditure, so the whole lot can be an expense in the first year. Your paper accounts however will show depreciation in order to show it's value as an asset.
As far as I am aware you have to put it through your books when you buy it as per tax point, unless things have changed.