Laptop, Expenses and Corp Tax Relief

[xoggoth]

Don't buy capital equipment any more myself but hasn't the first year allowance now been replaced by this investment allowance thing where you can claim the lot?

[zedAccounts]

Don't buy capital equipment any more myself but hasn't the first year allowance now been replaced by this investment allowance thing where you can claim the lot?

Yes the new thing is AIA. It was CA when I bought my laptop 3 years ago; i claimed 50% for first year then 20% for each subsequent year.

ZED.

[zedAccounts]

Which leads me to another thought... aren't CA/AIA suppose to compensate for the fact that depreciation is not an allowable expense? It seems some of the confusion here is due to ppl thinking that they can "claim" for a laptop in the same way they can claim for a train ticket. The two scenarios are completely different.

ZED.

[Stag Cozier]

>Capitalised or written off as an expense in that year?

I seem to recall reading a "rule of thumb" of if less than £100 then treat the item as a revenue expense, otherwise as capital expediture.

ZED.

Probably true back in the 80's when IBM's were the size of houses! Nowadays, £101 item isn't really an asset of the company is it?

[randysavage]

Hey. Many thanks for the replies - plenty of weekend reading there. I'll convey this to my accountant (god help me) and report back what they say

thanks again

[randysavage]

Guys

one further question / clarification on this laptop post

I understand the bit about getting £1200 relief in the first year for the full amount

I understand the bit about the new laptop getting £1300 relief in this current year

I understand that by selling the old laptop for £800 amounts to profit and it would be taxed

What I dont understand is whether there is any retrospective element to this taxing? Is it just a 21% tax hit on the £800 (£168) in the current tax year?

Or is there some kind of depreciation element to it? ie: even though the laptop was sold for £800, depreciation should be applied to the original £1200 expenditure?

or am I complicating it too much?

Nearly there!

Thanks, MM

[zedAccounts]

You may want to have a read at: Depreciation, Capital Allowances and Annual Investment Allowance | Accountants & Bookkeeping - Loughborough, UK

It seems the non-taxable part is the depreciation. So in your case your laptop depreciated £400, so you are entitled to relief for that amount. If you claimed for the entire £1200, you will need to reply the tax (£168) saved by declaring the £800 as profit.

ZED.