How to calculate capital allowances?

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a-okadmin

a-okadmin

Free Member
Jun 1, 2005
276
6
Paisley, Renfrewshire
  • #1
    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.
     
    dcaccounting

    dcaccounting

    Free Member
    Jan 27, 2006
    145
    1
    South West
  • #3
    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
     
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