I know some people use a purchase price threshold for determining whether to treat something as an asset or an expense - IMO the logical approach is to base it on whether the item will have any significant value after the first year.
If it's something intended to be used over a reasonable period of time and will retain value beyond the year in which you purchased it then it makes sense to me to treat it like an asset and keep it on the balance sheet. If its consumable or has a short lifespan or negligible value after a year then I'd treat it like an expense.
I'm not sure if there's a hard and fast rule about it. I'd treat a cheap desk (e.g. something from Ikea) < £200 as an expense but an expensive motorised standing desk costing upwards of a grand as an asset. A desk fan would be an expense, air con (including installation) an asset. I've treated mobile phones as both assets and expenses in the past but would generally treat them as assets these days.
Dealing with capital allowances and depreciation isn't really that complicated - most bookkeeping software like FreeAgent will handle it for you. In short you claim 100% allowances in the first year under the AIA, then depreciate it over x years depending on the asset, with the depreciation being non-deductible for corporation tax purposes. If you sell the asset then you need to deal with a balancing charge but your accountant should be able to deal with that for you.
The only other thing to bear in mind is if you ever decide to MVL and close your business down, most "cheap" MVL services will require you to get rid of all non-cash assets first. This could be done by selling them to yourself - it can be a paper transaction where you raise an invoice and credit the amount to the director loan account, then clear this with a dividend - but you'll need to account for VAT on the sale and handle the corporation tax balancing charge. Again, your accountant should be able to deal with this.
If it's something intended to be used over a reasonable period of time and will retain value beyond the year in which you purchased it then it makes sense to me to treat it like an asset and keep it on the balance sheet. If its consumable or has a short lifespan or negligible value after a year then I'd treat it like an expense.
I'm not sure if there's a hard and fast rule about it. I'd treat a cheap desk (e.g. something from Ikea) < £200 as an expense but an expensive motorised standing desk costing upwards of a grand as an asset. A desk fan would be an expense, air con (including installation) an asset. I've treated mobile phones as both assets and expenses in the past but would generally treat them as assets these days.
Dealing with capital allowances and depreciation isn't really that complicated - most bookkeeping software like FreeAgent will handle it for you. In short you claim 100% allowances in the first year under the AIA, then depreciate it over x years depending on the asset, with the depreciation being non-deductible for corporation tax purposes. If you sell the asset then you need to deal with a balancing charge but your accountant should be able to deal with that for you.
The only other thing to bear in mind is if you ever decide to MVL and close your business down, most "cheap" MVL services will require you to get rid of all non-cash assets first. This could be done by selling them to yourself - it can be a paper transaction where you raise an invoice and credit the amount to the director loan account, then clear this with a dividend - but you'll need to account for VAT on the sale and handle the corporation tax balancing charge. Again, your accountant should be able to deal with this.
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