Capital Allowances

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
Can someone please help me?

I'm a recently qualified Technician and I'm helping a friend out with their tax return.

Their business is that of a mobile disco and, consequently, he's always buying new pieces of kit (microphones, CD players etc), which are not cheap!

My question is that regarding capital allowances. Does anyone know how I should treat these expenses?

Are they simply written to expenses in the first year, or do they have to be capitalised and amortised?

Sorry if it sounds like a stupid question, but, as I say, this is the first 'real' client I've had - everything else seems straight forward enough, but I just need to know that I'm dealing with this correctly.!!

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital Allowances

    Yes they would need to be capitalised and written down over the useful life of the asset. Don't forget about FYAs.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital Allowances

    Thanks Claudia, but I can't seem to establish what the FYA is for this type of equipment. I've looked on the HMRC website, but I can't find it.

    Also, how do I determine 'useful life'? Do I take the DJ's word for it? Sorry to sound thick, but I've only ever done these situations in theory before! The experience will be good for me though!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital Allowances

    For the year ended 05.04.06 FYA is normally 40%.

    As far as tax comps are concerned you just use a reducing balance.

    Hope this helps.

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital Allowances

    Thanks for your help Claudia.

    I had found 40% on the HMRC website, but just wasn't sure.

    It's nice to be able to ask these questions, just to be sure that you know what you're doing!

    Thanks again.

    Kellie
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Capital Allowances

    Any questions you need, please drop me an email

    robin@rstride.co.uk

    Basically yes Cost £1000 FYA 40% £400 C Fwd £600

    2nd Year Bfwd £600 WDA (25%) £150 Cfwd £450 etc etc

    Dont forget is there any private usage ?

    Just as a footnote, Have you registered with the AAT as a registered or Licenced member to provide accountancy services, and if so, dont forget their rules, you should only undertake work that you are competent to undertake ! :D

    Robin Stride FMAAT Membership F412

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