Sole Trader Cap Ex

[cjd1965]

Hi
I am a sole trader currently in the 2nd year of my business. The nature of the business is programming machinery using a laptop etc.
At present I am using a 'personal' laptop which I owned before I became a sole trader. I would now like to buy a more powerful laptop circa £700 as a business asset because the new software i use needs a better spec PC. What is the procedure for writing the new laptop off against my tax as capital expenditure? Because I already have 2 other PCs in the household the laptop will be used soley for the business.

Year 1 ....
Year 2 .... etc

Thanks

[pawncob]

Claim 100% capital allowance in the first year.
See:http://search.hmrc.gov.uk/kbroker/inldrev/inldrev/search.lsim?sr=0&nh=20&cs=iso-8859-1&sc=ir&ha=7&mt=0&qt=capital+allowances

[cjd1965]

Thanks for the reply.

I am in my 2nd year so first year doesnt apply (big mistake on my part I think.. should have bought it last year).

The documents on the link you sent seem woefully out of date, and say i can claim 100% between april 1st 2000 and 31 March 2004.

As we are now in 2009 this is a little confusing lol

I need to know what I can claim for on my tax return for my 2nd year of trading

Cheers

[robbob]

Hello

First year allowances have nothing to do with which year your business is in. It relates to the fact that in the year of purchase you could claim higher allowances in that year.

Having said that FYA's do not apply for normal plant additions made after 6/4/08.

From 6/4/08 you can have up to £50,000 annual investment allowance in new plant - this is at a rate of 100% of expenditure.
So providing you don't spend more that 50k on plant you will claim the full £700 against yor income for this year.
Note the 50k limit is reduced pro-rata for any accounting periods that include dates before 5/4/08 and after 5/4/08.

[cjd1965]

Thanks Robbob
So to a layman like me, the first year is the first year of the actual expenditure, not the year of trading.

So, to clarify, I can claim 100% of the cost against my tax bill for the year in which I purchased the capital equipment (laptop)

[robbob]

Yes providing

1.) expenditure is after 5/4/08
and
2.) Total plant expenditure for this accounting period is less than 50k (50k will be reduced for proportion of this accounting period that falls prior to 5/4/08)

Note you never claim 100% of the cost against your tax bill - your claim reduces your income that is liable to tax.
So your tax bill will drop by 28% of £700 - if you are standard rate taxpayer. 20% tax 8% NI

[cjd1965]

thanks for taking the time to provide the advice.