capital allowance

Shirty, "capital allowances" are part of how your tax bill is computed as a company/sole trader. What Capital Allowances do is spread the deduction for tax of an asset (something that you use for more than 12 months in the business) over several years. Ie if you buy a machine that you will use for 3 years, you don’t deduct the whole purchase price from your taxable profits in year one, but it is effectively spread over the 3 years. [Although not an even amount each year.] It is not a matter of choice (although there are various claims which can be made), and it doesn’t affect your VAT reclaim, which is entirely dependant on your company being VAT registered. You don’t really have to worry about CA's - you accountant will do the computation for you as part of your tax return and accounts Regards, James Smith Chartered Accountant [url]www.jamesesmith.co.uk[/url] [url]www.uktaxshop.co.uk [/url] 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Hi James may be able to put some work your way (i dont have an accountant) will i be able to contact you on 01284 764436 tomorrow noonish thanks

Please feel free to drop me an email or call, Regards, James Smith Chartered Accountant [url]www.jamesesmith.co.uk[/url] [url]www.uktaxshop.co.uk [/url] 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

Hello James, on the subject of Capital Allowances, for sme's is there any advice on how long an asset should last, eg 2nd hand van, how is the number of years life expectancy reached, do IR have a website that explains all this in english. Computers/software etc come under the fya of 100% if purchased prior to 31 March 2004 but what about other objects such as a builders/joiners tools etc. Any advice gratefully received.

Ritac, I know you are a bookkeeper, and assume you need to know for bookkeeping purposes. If so you don’t need to concern yourself too much with CA's - these are purely a tax thing, which presumably you aren’t computing for clients but leaving this for their accountant. All you should be putting in is depreciation, similar concept but an accounting and not a tax one. There you are free to set the lives of your assets in an accounting sense, and match the assets to the time over which they are likely to be used. Any basic accounting book will cover these concepts. For tax the age or life of the assets is not normally relevant, you just get a balancing charge when the asset is disposed of. The basic CA's are 40% first year for a small business, and 25% thereafter for most assets. Classes such as "expensive vehicles" have a £3000 per annum limit, and there are lots of other complexities you would need to be aware of if computing these for clients. As a basic guide for how the CA's work, the information given out on the back of a tax return for the self employed isn’t too shabby. You can also look to the IR leaflets Ir222, IR250 etc for worked examples. Regards, James Smith Chartered Accountant [url]www.jamesesmith.co.uk[/url] [url]www.uktaxshop.co.uk [/url] 01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773

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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT

James,
pls I am presently working on the 'effect of Leasing (capital allowance) on shareholders fund' ,are there materials you can refer me to on this?
thanx.