I am totally confused maybe because of the word 'allowance; in Annual Investment Allowance.
Essentially Im confused over how to show the purchase on computer equipment and office furniture in accounts and for Cort Tax return and calculation. Obviously it is a Limited Company and very small.
I will use an example to show my rookie-ness and confusion.
Lets say the company turnover (sales) were 10,000 in the company accounts year.
It bought Pc's and office furniture to the value of say 4,000 from the sole Director (used equip prev purchased and used by the Director for personal use).
The Director doesnt want paid right now as it would be a hit on the business.
So do we show this as
10.000
4000 (Directors Loan)
6,000 Taxable profir
Corp Tax at 20% due = 1,500
Whats confusing but interesting is the whole Annual Investment Allowance scenaio. Does AIA mean?
10,000 Sales
4000 Directors Loan for the purchase of computers etc)
6,000 Profit
4000 Annual Investment Allowance - for the purchases of compouters
2,000 Profit after deducting AIA
500 Corporation Tax
This seems to be 'to good to be true'....
Or is it simply that had it not been a Director selling equip to the Limited Company that non-capital purchases would be shown as such and any Capital Element (computers etc) would be shown or deducted in Corp Tax as Annual Investment Allowances.
It seems all very confusing to me
Essentially Im confused over how to show the purchase on computer equipment and office furniture in accounts and for Cort Tax return and calculation. Obviously it is a Limited Company and very small.
I will use an example to show my rookie-ness and confusion.
Lets say the company turnover (sales) were 10,000 in the company accounts year.
It bought Pc's and office furniture to the value of say 4,000 from the sole Director (used equip prev purchased and used by the Director for personal use).
The Director doesnt want paid right now as it would be a hit on the business.
So do we show this as
10.000
4000 (Directors Loan)
6,000 Taxable profir
Corp Tax at 20% due = 1,500
Whats confusing but interesting is the whole Annual Investment Allowance scenaio. Does AIA mean?
10,000 Sales
4000 Directors Loan for the purchase of computers etc)
6,000 Profit
4000 Annual Investment Allowance - for the purchases of compouters
2,000 Profit after deducting AIA
500 Corporation Tax
This seems to be 'to good to be true'....
Or is it simply that had it not been a Director selling equip to the Limited Company that non-capital purchases would be shown as such and any Capital Element (computers etc) would be shown or deducted in Corp Tax as Annual Investment Allowances.
It seems all very confusing to me
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