Is software an expense or a capital allowance?

[glippiglop]

Hmmm....

Back in New Zealand, anything under $200 (that's only 80 GBP mind) can be treated as an expense regardless of what it is - you can also claim back the sales tax and you don't need a receipt as evidence. If the value of an item depreciates under $200 you can also write it off.

Can anyone tell me if there's a similar level of leniency in the UK? What are the thresholds?

[xoggoth]

Can't imagine the IR challenging allocation totalling £200.

[glippiglop]

I would always treat software as capital by default... think about it, if you buy software in a box and can on-sell it, it's definitely capital.

However there are always going to be exceptions, e.g. subscribing to software as a service is an ongoing expense.

There is no absolute rule of thumb here - that's why you're getting different answers and need to work it out for yourself.

[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.

[Sockpuppet]

Is £200 small?

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

Yes

[IanIan]

Is £200 small?

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

[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.

[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

[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.

[IanIan]

OK I will. Thanks.

[Nixon Williams]

Treat this as an expense!

Alan

[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?

[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.