How to calculate capital allowances?

[a-okadmin]

Hi,

I am hoping to get advice from an Accountant. I have been trying to complete my tax return online. I am a bit confused with the Capital Allowances bit. For example, if a bought a PC for use in my business at £500, do I enter the total amount in my tax return, or can I only claim a certain percentage.

Thanks.
Clare.

[TaxesClear Ltd]

-certain percentage, which is 40%.

Dennis

[dcaccounting]

When you buy an "asset" it is capitalised and taken away from the P & L account (you don't get the full cost allowed straight away) hence capital allowances...

The full cost is then proportioned over a set percentage issued by the revenue and as Dennis says for 2005-06 the "FYA - First Year Allowance" is 40% what this means is you must of bought the asset within the year in question to be allowed to claim the 40% if not it will be 25% called "TWDV - Tax Written Down Value"

Although for "computer equipment" I tend class it as "SLA - Short Life Assets" and apportion the % over the assets useful life.... i.e computers are updated all the time so the computer might need upgrading in say 2 years, therefore claiming capital allowances at 50% straight line for 2 years.

Glad you asked now aren't you? :D

Regards

Dean

[Kent Accountant]

or you could look on the Business Link website http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073868259

[Donnash]

I have been trying to complete my tax return online.
As far as I understand, you fill in the whole amount and they then work out the percentage.