Originally posted by Greg@CapitalCity
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Previously on "Expensing vs. Capitalising of Computer Equipment Purchases"
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Originally posted by Neo View PostSo, now I'm a little confused. FreeAgent states that computer purchases less than £500 may be expensed. And my accountant says that computer purchases less than £1000 may be expensed. Is this because HMRC are generally cool with such low-cost equipment being expensed? There's nothing in the guidance regarding this.
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Accounting for computer hardware as company assets means your LTD has improved equity - until the hardware has been depreciated, of course - so it may make some difference regarding how much dividend you can take out of the company.
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Originally posted by Just1morethen View PostThis might be of benefit to you: Asset - Wikipedia, the free encyclopedia
Although do bear in mind that you get 100% tax allowances on asset purchases so the tax treatment ia different but the end position is essentially the same.
Edit: I've just read this Contractor UK guide which links to this very useful HMRC page which links to a more specific page on capital expenditure. It appears that computer equipment is generally considered to be a capital expenditure and therefore is not allowed as a business expense. The ability to capitalise it allows you to get the tax relief from it over time (depreciation) which you would normally get if it were allowed as a business expense. So, now I'm a little confused. FreeAgent states that computer purchases less than £500 may be expensed. And my accountant says that computer purchases less than £1000 may be expensed. Is this because HMRC are generally cool with such low-cost equipment being expensed? There's nothing in the guidance regarding this.Last edited by Guest22; 19 November 2012, 01:58.
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This might be of benefit to you: Asset - Wikipedia, the free encyclopedia
Although do bear in mind that you get 100% tax allowances on asset purchases so the tax treatment ia different but the end position is essentially the same.
Leave a comment:
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Expensing vs. Capitalising of Computer Equipment Purchases
I've been discussing with my accountant recently whether I should capitalise purchase of computer equipment as it seems to be fairly undefined what should and shouldn't be classed as an expense or an asset that depreciates.
My accountant tells me that, generally, purchases over £1000 should be capitalised, but, also, that there is no specific guidance and it doesn't really matter as far as tax inspection is concerned. I can't see any financial benefit to capitalising a purchase, and it just seems like an extra admin overhead to do so. So, I am thinking, why would anyone capitalise computer equipment?
My recent purchase was of a NAS for less than £600. I am about to sell my personal laptop to my company for £1000. I am planning on purchasing a computer for the company in the near future for around £2500 - £3000. I'm thinking of just expensing all of these based on my understanding. Is there anything I am missing?
Thanks in advance.
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