Change in status of capital allowances

[jetrimby]

V quick reply to send you in the right direction. UNLESS you elected for short life assets (3 yrs or less) or were delcaring a % of private use the purchase goes into a plant "pool" this pool exists until you cease trade. If you sell (for less than you buy) there is a negative entry into the pool but does not match to the purchse of the specific item So if scrapped nothing you can do about but take the yearly write down

This year there is a 100% allowance on first £50,000 of plant so this should not be a problem any more plus if pool less than £1000 (off memory so could be wrong figure) you can write this off as well.

If "main" purpose of a cost/equipment is business generally now you should claim 100% as business (ignore for vehicles!)

This is why people have to employ accountants !!

[IanIan]

Yes I've been reading the manual online. Its cool stuff and, dare I say it, if one reads it carefully enough one can pretty much work it out for ones self.

I think its the 'fair practice' stuff that one needs an accountant for - to tell one where the rules are not so rigid. I mean...

If "main" purpose of a cost/equipment is business generally now you should claim 100% as business

...this sounds like one of those fair practice things that I'd not know about.

Anyhow, my previous post was linking to software and how its treated as a special case for capital allowances in that, apparently, even if one stops using it, one doesn't need to give it a disposal value.

This year there is a 100% allowance on first £50,000 of plant so this should not be a problem any more

Even if you use the AIA, the new items still go in the main pool but they go in with a value of 0. If you sell them I believe you'd still have to deduct their disposal values from the main pool.

[jetrimby]

HI the pool system works that UNLESS you get proceeds from a sale or scrappage you continue to get the tax claim year after year, whether an individual item is used or stored or chucked. BUT any item which is disposed of for money goes into the pool reducing the value available for the 20% (as of now) relief. IF the pool goes negative you have a "balancing Charge" ie you will increase profits not decrease them!
Re private use the rules (or Revenue interpretation of rules) has changed for costs generally. If expense is needed in the business then any private use is ignored (cars and vans etc have special rules) I would tend to use this with capital items as well BUT if heavy private use and expensive and lower need for business I would (as done in past under old rules) claim a % as business and % as private. (ditto for VAT)

IF item is taken into private use completely then you should have a disposal value being the deemed market value of the product at that time. (For instance give your child a 3 year old laptop for their use.... what is a 3 year old laptop worth??? £10 ?? therefore normally not something to worry about). IF your screen is a 40 inch wide screen panel which 6 months later goes into the lounge as a TV that is another matter!!!

The AIA relief is just another way of removing value from the pool so yes if something is sold later than it needs to be deducted from the residue of the pool if left (or treated as a balancing charge as mentioned above)

[mahon and co]

Use Annual Investment Allowances where you can not CA's

Hi,

No one ever seems to be free on the self assessment helpline so I thought I'd have a go here...

a) In a previous year I included some software in my capital allowances at 100% business usage. I've now started to use it for a personal project. So should I reduce what's left of its value in the CA pool?

b) My computer which I considered to be a capital allowance a few years ago broke. I didn't fix it but I could probably still sell it for spare parts. Should I keep its value in the pool for this year as if I was still using it?

Cheers, Ian.

In theory yes you should reduce you capital allowances to tak account of private use - unless it is insignificant. Unless your software was enormously expensive the private use is likely to be insignificant.

Your computer is a short life item as far as capital allowances are concerned. If you you can proove you bought it less than 5 years ago then write it out of your general pool.

In theory your assets may remain in single asset pools pretending to be short life assets until they are 5 years old when they get get transfered to the general pool.

Remember to use your AIA (Anual Investment Allowance) to claim 100% of new asset purchases up to the limit of £50,000 before you claim capital allowances. Most small and medium sized businesses are entitled to them.