Reply to: Laptop, Expenses and Corp Tax Relief

[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.

[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

[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

[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?

[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.

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Don't buy capital equipment any more myself but hasn't the first year allowance now been replaced by this investment allowance thing where you can claim the lot?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

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Don't buy capital equipment any more myself but hasn't the first year allowance now been replaced by this investment allowance thing where you can claim the lot?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

>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. It seems to me a £1000 laptop ought to be treated as a company asset, and CA/AIA only applies to company assets anyway.

ZED.

[Stag Cozier]

Ok just to throw a question about a similar situation I am in I dropped a brand new (2 months old) netbook which the repairs said wasn't cost effective to repair so bought a new one. Can I write the old one off as a total loss or do I have to follow some procedure to show a claim or the damage? btw they are only £250 a pop.

The first knackered netbook can be classed as a straight expense and written off as a cost/expense in the current accounting year.

Your spanking new netbook should be treated the same i.e. an expense rather than capitalised as an asset of the company (assuming it is just as cheap as the first one )

[Stag Cozier]

First time for me on this forum so here goes ......

Not sure if you got a satisfactory answer to your question. As you received full tax relief on the old lap top and you expect to sell this laptop for £800, you will effectively make a profit of £800 and you will therefore be taxed on this amount. The new laptop will be treated the same as the old one and therefore the full cost of the new laptop will be deducted from profit. I had a similar situtation and this is how it was explained to me by my accountant.

Not quite right or there yet.

Questions to the OP to ask their accountant first:

1. When exact was the old computer put into the business?
2. Where was it analysed in the company accounts? Capitalised or written off as an expense in that year?
3. If capitalised, what is the net book value on the balance sheet of the asset now i.e. what is it's value showing on your last set of accounts?
4. If capitalised, is it still showing as a separate item on the capital allowances calculation or stuck in a "general pool"?

Before anyone can give you a proper answer, you need to know the above.

[northernladuk]

Ok just to throw a question about a similar situation I am in I dropped a brand new (2 months old) netbook which the repairs said wasn't cost effective to repair so bought a new one. Can I write the old one off as a total loss or do I have to follow some procedure to show a claim or the damage? btw they are only £250 a pop.

[mines a pint of mild]

First time for me on this forum so here goes ......

Not sure if you got a satisfactory answer to your question. As you received full tax relief on the old lap top and you expect to sell this laptop for £800, you will effectively make a profit of £800 and you will therefore be taxed on this amount. The new laptop will be treated the same as the old one and therefore the full cost of the new laptop will be deducted from profit. I had a similar situtation and this is how it was explained to me by my accountant.

[randysavage]

No - the first £100,000 of capital expenditure is allowable in full, so you'll get £600 off in year one. If you sold the asset at a later date there may be a charge - effectively a reversal of the allowance you had overclaimed, based upon the proceeds of sale.

CA23081 - PMA: Qualifying expenditure: Annual Investment Allowance (AIA) qualifying expenditure: outline

Hi Clare

So with specific reference to my example, I would have got £1200 of relief on the old laptop in the first year, then decreasing amounts in subsequent years?

Who would be able to confirm that charge? Can't find in on the HRMC website and my rep at SJD doesnt seem too on the ball / proactive.

Thanks

[Clare@InTouch]

oops..I just bought a £600 quid laptop and removed the fulll amount from my Ltd as expenses.....whilst that's still correct I'm guessing I'd be only detailing 50% of 600 on the CT return.

No - the first £100,000 of capital expenditure is allowable in full, so you'll get £600 off in year one. If you sold the asset at a later date there may be a charge - effectively a reversal of the allowance you had overclaimed, based upon the proceeds of sale.

CA23081 - PMA: Qualifying expenditure: Annual Investment Allowance (AIA) qualifying expenditure: outline

[Olly]

oops..I just bought a £600 quid laptop and removed the fulll amount from my Ltd as expenses.....whilst that's still correct I'm guessing I'd be only detailing 50% of 600 on the CT return.