for the accountants here...

[Tom]

OK a friend of mine was around last night, telling me how he had managed to offset new computers against his tax bill. Basically he said he bought 12k of computers, against a 12k tax bill, so he didn't pay any corporation tax. This is a tax break being run by the IR, it might end next April.

Now I always thought that you could only offset the price of the computer (say £1000) against your tax bill so that 22% (thats what I pay) of what you spent on computers would come off your tax bill (so spending £1000 would knock £220 off your tax bill).

He is adamant that no, £1000 on computers = £1000 off tax bill. My accountant says he is mistaken.

Any accountants here know more about this? I could do with upgrading my iPAQ

 

[Scouse]

Yeah - he's talking shit. I bought a 3k computer last year and got whatever it is off the tax bill - not 100% tho.

Basically - you normally take 3 years to clear whatever assets you have off the company's net value - and you pay tax on the whole amount of the company's value (or something). Basically - you get to write off the value of the PC in 1 year - so you don't pay tax on that - but you can't actually offset the whole amount against your tax bill - it just reduces it slightly.

Your m8 is talking sh1t - he's mistaken - and, quite laughably, is going to get stung for a big fuck off corporation tax bill he may not have the money to pay because he's spent it all on PC's

 

[Tom]

Well I'm glad I was correct, but I'm also annoyed that I can't buy mehself a new comp!

Oh well, I'll let him know the bad news...

 

[xane]

I seem to recall that anything used to offset corporation tax will be taxed when you sell it, albeit at a lower cost, so watch out for that one too.

 

[Gumbo]

On a related note...

I have just bought a laptop to help me in my job, basically for using electronic cataloging and data sheets for car parts.

Can I claim any sort of tax break against that sort of a purchase?

I would imagine not, but you never know so I might as well ask.

 

[Embattle]

Originally posted by Tom

He is adamant that no, £1000 on computers = £1000 off tax bill. My accountant says he is mistaken.

If that were the case then every company would spend it on equipment and not pay tax

 

[Tom]

Originally posted by Gumbo
On a related note...

I have just bought a laptop to help me in my job, basically for using electronic cataloging and data sheets for car parts.

Can I claim any sort of tax break against that sort of a purchase?

I would imagine not, but you never know so I might as well ask.

You bought it/your company bought it, self employed/employed?

Generally, if its for work, its tax deductable.

 

[Ono]

I think a year or so back the Government allowed you to accelerate your Captital Allowances on IT equipment against your Taxable profit in one year rather than giving you a Written Down Allowance of 25%. Don't think this relief exists anymore and you have to use the 25% rule again.

Regardless, the CA is set against Trading Profits and not against a Tax liability so if you had a profit of £100k, CAs of £10k your Taxable Profit would be £90k meaning that Corp Tax would be at 30% = £27k.

 

[caLLous]

Ono, teach me how to spend money.

You sound more than knowledgeable.

 

[MYstIC G]

Actually you are supposed to be able to get 100% first year allowance see here however as usual for the IR site the full information page is fucking missing.

Edit: after much more more hunting - http://www.inlandrevenue.gov.uk/manuals/capitalmanual/CA23130.htm

 

[Tom]

So effectively, 100% allowance means that all of that profit which you spent on computers is not regarded for tax, so if you make £1000 profit, and spend that profit on a computer, then you don't get taxed on that £1000 - ie £220 or £400 (whatever your tax rate) comes off your tax bill.

My friend has some serious explaining to do

 

[MYstIC G]

Originally posted by Tom
So effectively, 100% allowance means that all of that profit which you spent on computers is not regarded for tax, so if you make £1000 profit, and spend that profit on a computer, then you don't get taxed on that £1000 - ie £220 or £400 (whatever your tax rate) comes off your tax bill.

My friend has some serious explaining to do

That is my basic understanding of it. Essentially your friend is going to get clipped so I hope what he has done is based on the advice of an accountant who he can sue for damages when the IR come round and rape him for his tax.

Just gently remind him that there is: "No such thing as not having to pay the Inland Revenue"

 

[Yoni]

being an accountant does not mean we are tax experts just that we are accountants

 

[Deadmanwalking]

Yes but not all accountants are as evil as you. Saying that most accountants can count

 

[Scouse]

Originally posted by Ono
I think a year or so back the Government allowed you to accelerate your Captital Allowances on IT equipment against your Taxable profit in one year rather than giving you a Written Down Allowance of 25%. Don't think this relief exists anymore and you have to use the 25% rule again.

Regardless, the CA is set against Trading Profits and not against a Tax liability so if you had a profit of £100k, CAs of £10k your Taxable Profit would be £90k meaning that Corp Tax would be at 30% = £27k.

That's the fella!!

 

[dysfunction]

Originally posted by Deadmanwalking
Yes but not all accountants are as evil as you. Saying that most accountants can count

No we use a calculator or complicated excel spreadsheets...