First year business self assessment assets

[maffp]

Hi!

We're about to start on my wife's self assessment for 11/12. She's been on SA for years but in Jan this year she started a shop and so paid a lot of outgoings and we expect to pay no tax for that year. The one thing that throws me is capital assets...

I've read conflicting info on spreading the cost of assets (e.g. laptop). Does spreading the cost also apply to self assessment returns or is it limited to the profit and loss account for the shop? I.e. for a £500 laptop can the whole value go as an expense in the self assessment for this year or would I have to split it into - for example - 3 (for 3 year life of machine)? I've done plenty of SAs before but never done profiut and loss (I use accountant for my own business as much more complex than my wife's small shop).

Thank you!

 

[MyAccountantOnline]

Hi!

We're about to start on my wife's self assessment for 11/12. She's been on SA for years but in Jan this year she started a shop and so paid a lot of outgoings and we expect to pay no tax for that year. The one thing that throws me is capital assets...

I've read conflicting info on spreading the cost of assets (e.g. laptop). Does spreading the cost also apply to self assessment returns or is it limited to the profit and loss account for the shop? I.e. for a £500 laptop can the whole value go as an expense in the self assessment for this year or would I have to split it into - for example - 3 (for 3 year life of machine)? I've done plenty of SAs before but never done profiut and loss (I use accountant for my own business as much more complex than my wife's small shop).

Thank you!

You'll certainly need to prepare a profit and loss account and ideally a balance sheet to complete your wifes SA tax return.

The depreciation you charge in the accounts whatever you decide to charge isnt allowable for tax purposes instead you will claim capital allowances on the equipment capitalised.

If you are going to DIY have a look at the HMRC website - for assets search on capital allowances and the Annual Investment Allowance (AIA).

It just maybe worth asking your accountants what they'd charge to do this for you. If you've maintained some good accurate records it may not be as much as you think.

 

[maffp]

Hi! Thanks for the reply and sorry it took so long to get back to the post! Safe to say I'm still a little thrown by the capital allowances...

We bought some shelf brackets for £100. I would assume they'd be in use for about 5 years. Does this mean we can claim £20 expenses for the next 5 years?

Plus I have lots of small cost fixtures and fittings... eg £30 lampshade etc. Do these have to be broken up into life spans? I also bought a cash drawer for £20. It seems crazy to see these as assets and have to spread the cost. The most expensive thing was a £200 mirror and a £100 counter.

Also, What do Paints and decoration come under?

And one more... we paid a £3000 bond for the rent of the premises. Does this count as an expense or is this ignored both now and when it's returned to us?

Thank you thank you thank you!

 

[Scalloway]

I would just put them through as expenses. The rent bond is an asset. It will appear on your balance sheet until it is repaid to you.