Is software an expense or a capital allowance?

[IanIan]

Hi,

Do I put the full cost of software tools I have purchased as an expense or take a percentage and put it down as a capital allowance?

I rang the self assesment help line twice. The first time they said is was a CA and the second time the guy very confidently said it was an expense.

Cheers, Ian.

[malvolio]

Treat it as an expense. I had a long-running argument with the accounts team about that in my last permie role where I had a licence cost of around £12k a month (so it was significant). We eventually agreed that since you can't easily sell it on - you don't own it, you merely licence it - it should be treated as a revenue item. However, there is an argument for capitalising the initial cost and revenuing the maintenance and support charges.

If you do capitalise it though, how do you depeciate it, since as soon as you buy it it has practically no resale value?

[Nixon Williams]

Treat this as an expense!

Alan

[IanIan]

OK I will. Thanks.

[IanIan]

Well I was ringing the help line about another issue and this thread's question arose again and this time the help desk person said that software should be a CA!

So I'm happy to go with it being an expense but isn't that a bit strange that the self assessment help desk personel disagree on this?

Ian.

[Ardesco]

So I'm happy to go with it being an expense but isn't that a bit strange that the self assessment help desk personel disagree on this?

Strange that the IR are fecking clueless...

No not really

[xoggoth]

Strictly speaking software, unless it is an upgrade, is capital. However, it is
fair practice followed by accountants to treat smallish amounts as current expenditure.

[IanIan]

Is £200 small?

And I'm talking about my upgrade to SQL Server 2005 and VS 2005.

[Sockpuppet]

Is £200 small?

And I'm talking about my upgrade to SQL Server 2005 and VS 2005.

Yes

[Sockpuppet]

Strictly speaking software, unless it is an upgrade, is capital. However, it is
fair practice followed by accountants to treat smallish amounts as current expenditure.

I treat mine as capital which will be depreciated over 3 years. The software is free updates as long as you subscribe to the update service.