Capital Allowances

[Richlist]

Can I just check......is everyone else claiming 100% of their expenditure on capital items (eg purchase of large or expensive pieces of equipment used in the rentals business such as steam cleaners & power tools) on their annual tax returns now ?

[Carryon Regardless]

Do you mean as opposed to claiming the write down allowance due to depreciation ?

[Richlist]

Yes that's it exactly.

We used to claim a writing down allowance every year but we now claim 100% of the cost of any new items used 100% in the business.......although that doesn't include cars of course.

I'm just about to buy a portable generator for use in the business and I'm interested to know what others do about claiming such costs.

[Carryon Regardless]

My problem with the write down allowance has been that many of the items I might apply it to would be broken and replaced within a period when it should still have a residual value. I have applied the 100% cost as a business cost so there is no change for me, unless Mr Taxman was to say otherwise at least.

On closure of the business, or in the event of a sale of such equipment the revenue should be accounted for so would effectively be taxable anyway, regardless of age.

[Richlist]

If I remember correctly the writing down allowance used to vary for the first year. It started at 25% then went to 40% (around 2001) & eventually went to 50% (around 2007) as different Governments changed the rules. Then the remaining balance could be claimed / written down at 25% each year thereafter. If the item broke you wrote it off. If you sold the item then the income became a balancing charge. So, all eventualities were covered.

Now, my understanding is that we can claim 100% of the cost for items used 100% in the business....up to certain (quite large) limits. If an item is shared say, 50:50 between business & private use then you just claim 50% of the cost. Makes the accounting so much easier and you get all the allowance immediately.

You seem to be claiming 100%....what are others doing.......or aren't you claiming anything ???

[Carryon Regardless]

You're correct, I apply the expense at 100% of cost for tax purposes.

[Melboy]

What sort of items are you "writing down"?

[Richlist]

In my case its pieces of equipment that I buy for use in the business. Over the years that's included.......carpet cleaning machines, computers, printers, office furniture, filing cabinet, steam cleaner, wallpaper stripper etc etc.

[Melboy]

In my case its pieces of equipment that I buy for use in the business. Over the years that's included.......carpet cleaning machines, computers, printers, office furniture, filing cabinet, steam cleaner, wallpaper stripper etc etc.

OK .... I do claim for my printer which expires about every 3 years and I do print a lot of paper for contracts etc. etc.

I will claim for my computer when the time comes for it to go and that won't be long now.

[Richlist]

Its important that you consider:-

* Any private use needs to be taken into account when claiming.

* As does the size of your rental business. Clearly business use for one rental property is going to be a fraction of that compared to someone with thirty properties.

[Chestnut]

Has this topic been prompted by introduction this year of new 'Cash Basis' alternative of stating Profit and Losses for tax on self-employed business? If 'Cash Basis' used Tax Return notes state you can no longer claim Capital Allowances, except for cars.

In past I used to write off part cost of computer etc. as Capital Allowance. This year I ticked new 'Cash Basis' as simpler, and save having to sort out 'write downs' for C A because, not being property tycoon like some, my business use of home equipment has diminished to tiny proportion.

Alternative would have been expense of hired accountant to explain what alternatives meant, and implications for me.

[Richlist]

Has this topic been prompted by introduction this year of new 'Cash Basis' alternative of stating Profit and Losses for tax on self-employed business? If 'Cash Basis' used Tax Return notes state you can no longer claim Capital Allowances, except for cars.

No that's not what prompted my original question. I'm just purchasing a petrol generator for use in the business and wanted to check how others dealt with this type of expenditure.

I already claim capital allowances for my car as I find it better than just claiming 45p per mile.

In past I used to write off part cost of computer etc. as Capital Allowance. This year I ticked new 'Cash Basis' as simpler, and save having to sort out 'write downs' for C A because, not being property tycoon like some, my business use of home equipment has diminished to tiny proportion.

My understanding is that writing down allowances have not been available for a few years now. Looking at my records, the 100% 1st year allowance for capital items has been in place since tax year 2008/9

[Chestnut]

Thanks RL. I'm probably out of depth on this topic, but had noticed introduction of 'Cash Basis' for business cost calculations for 2013-14 Tax Year (being submitted currently), with associated rule regarding Cap Allowances, except cars.

It affects other things I do, and C B wasn't on my Tax Return form for 2012-13 or previous years.

I'll swim back to shallow end now!

[Richlist]

I'm no expert.....I just like to make sure I claim anything & everything that I'm entitled to claim.

As far as I am aware .....if your annual income from property is less than £15K then you have always been able to be claim on a cash basis.

[sherryphillips]

Thank you for your suggestions.