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Where Taxpayers and Advisers Meet

Self assessment / annual investment allowance

Posts: 1
Joined: Fri Jan 12, 2018 1:32 pm

Self assessment / annual investment allowance

Postby SEBarrell » Fri Jan 12, 2018 1:36 pm

Is the annual investment allowance counted as part of overall expenses - for sole trader/self-assessment? Or are the two things seen as entirely separate?

I was told by an accountant years ago, to try and keep my exes at no more than about 25% of my income, to avoid getting unwanted attention from HMRC.
However, a big annual investment expense such as a new computer etc, significantly pushes up the overall percentage of earnings/exes.

Posts: 421
Joined: Fri Aug 07, 2015 2:17 pm

Re: Self assessment / annual investment allowance

Postby SteLacca » Fri Jan 12, 2018 3:08 pm

AIA and general expenses are shown separately. AIA represents capital expenditure, whereas general expenses represent revenue expenditure.

Having said that, I have to question the advice that you've been given. If expenses have been incurred for the business, then they should be included regardless of any arbitrary ratio.

Posts: 2922
Joined: Sat Feb 01, 2014 3:26 pm

Re: Self assessment / annual investment allowance

Postby bd6759 » Fri Jan 12, 2018 7:52 pm

Expenses are things that are shown in your profit and loss account. Income less expenses makes your profit.

AIA is a tax relief, claimed as a deduction from your profit.

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