[Adam Fearnley]

Could someone in the know explain how I write my machine off against tax.  I was told I can't write it all off in one (around £4000) and that I can only take 25% of the cost each year, I'd like to know what you guys did in your first few years.  Thanks

[markpowell]

The 25% is how insurance companies value equipment if is ever stolen, for example if you had to claim for your machine in 2 years you would only get £2000 after 4 years it is worth nothing.
I think you can claim the vat back on the originnal purchase all at once but i may be wrong, cant remember how it works.
Mark

[richy27]

my best advice is to get yourself an accountant for what it costs 3-600 if its fairly simple ..   will save you a fortune in the long run

[John Kelly]

Capital allowances for the tax year April 2010 TO April 2011 is 100%. This was brought in by the Labour government. It applies to any capital expenditure up to £100k. The coalition government are reducing this to £25k from April 2012, whos says they are business friendly.
So if you buy any equipment or vans now it means the full amount of that purchase can be written down, that means your profits can be reduced by the full amount you have spent in this year.
And a word of warning. A lot of people do not realise they have also changed the tax laws which come in to affect in April. In order to achieve higher tax revenues, the self employed are to be targeted to prevent tax evasion. They are going to be more pro-active which may include setting up stooge customers and properties to catch out tradesmen who are paid cash and avoid putting it through their books. And to make matters worse if you are caught they can estimate how much you have not declared going back 20 YEARS. Its a fine plus the unpaid tax they estimate you have avoided paying. This will be hard to dispute as the onus is on you to disprove it.

[John Kelly]

More here: http://www.bbc.co.uk/news/business-12544069

[clinton]

Thats a good post john and it was on the breakfast bbc 1 show the other day..

[Adam Fearnley]

Ok but I registered my business in august 2009 and I need to fill a form for april 09-10. So firstly how do I write if off, secondly i don't think my net income reached the tax limit so including my machinery on expenses would be a waste wouldn't it?  It's hard to get my head around, im being told different things even by an accountant, thanks still to you replies.

[Adam Fearnley]

Also I've just bought a van, and using it for personal  use too, and was told I can only claim for business mileage as a result and not for the cost of the van, this true?

[Phillip Mold]

go and and see a (different) accountant

[Dave_Lee]

I do not have an accountant. One could probably save you money, but these days you can most information from Customs & Excise on line or the phone.
Basically your equipment inc van costs, you enter into a Capital Expenditure Pool.
For these purchases in the year beginning 1st April 2009 to April 1st 2010 you can claim 100% against tax due as an Investment Allowance, up to £50,000.
Normal writing down allowance is now 20% which will reduce to 18% in 2012.
If your income does not cover your personal allowance, there is no point in claiming any Investment or first year allowance or any writing down allowance.
These Capital costs then stay in your Capital Expenditure Pool and you can claim the normal 20% (or 18% as it will soon be) in later years.
For example.
                                                                           Van     cost    £5,000
                                                                           Equipment     £4,000
                                                                              Total           £9,000
                       Less private use of van (Say 10%)                 - £   500
                                                                       New Total          £8,500 this goes into your pool.


Not making any Capital Allowance claim this year means you can claim a maximum of £8,500 x 20% = £1,700 capital Allowance
the following year, leaving £8,500 - £1,700 = £6,800 to carry forward to year after.
Don't forget you have to deduct the same percentage of personal use of the van against all your other van costs - fuel, insurance, mot, service, excise license and repairs etc.
Some guys use a mileage allowance scheme, which allows you to claim so much per mile your van has covered in the year. This makes it easier as you dont have to calculate all the expenses together. However using this scheme, you do not also claim for the expenses already mentioned, i.e. furl etc. You use the mileage allowance scheme or the full expenses scheme, one or the other, not both. You have to decide which one to use when your van is first introduced into the business as you cannot change the scheme until you get a different van.
One thing to be careful about is that if using the Mileage Allowance scheme - You cannot claim ANY Capital Allowance on your van, as this is automatically allowed for in the Mileage Allowance.
I know its all a bit to take in at first, but it's quite simple really, hope this helps.
Dave.

[Shaun_Ashmore]

You're mad Dave, when I did my first tax returns years ago I was set to pay more than £3000 more tax than when I let an accountant look at it, that paid for them for 10 years.

Shaun

[Carpet Dawg]

A good established accountant with a fancy address makes me sleep easy at night  plus i only get charged £320 a year for tax return. I couldn't do with that hassle.

[M.Acorn]

Same here Tony,mine costs me £285 a year,he is worth his weight in gold,used him since I first started

[Dave_Lee]

Not saying there's anything wrong with having a GOOD accountant, its just that doing self assessment online is so easy and even easier this year.
Shaun, I know sometimes they can save you money, because they know or should know everything that you can claim against tax, and yes I have fallen foul in the past by not claiming what I could have done, however I think I have it right, now.
Ive heard too many stories of self employed people going bust, and blaming their accountant.
The last one was a couple who had a kitchen business. It slowed down due to the current recession. They kept getting letters from the Revenue and Excise demanding £16,000 in unpaid tax. Their accountant was telling them to take no notice, it's all in hand, and being sorted out. Then the Tax lady arrived at their premises and gave them 14 days to pay. They couldn't raise the cash in that time, but did so not long after, unfortunately too late to save their business, and their house. They both now live in rented accommodation and he is working part time at the hospital.
Of course none of it was their accountants fault, it was theirs. They are solely responsible for paying their tax, their accountant was merely their agent. however if he gets it wrong big style, it will mean you pay big style.
Too many self employed think they are bombproof just because they have an accountant, this is not true.
I'd rather do it all myself, then if I go down because of it, its my own fault.
Dave.

[ryan mca]

should the tax return for 2009-2010 not have been in by the end of january 2011

Ryan

[Dave_Lee]

should the tax return for 2009-2010 not have been in by the end of january 2011
Ryan

Yes it should, but Adam registered his business in Aug 2009, so the end of his first trading year will be Aug 2010. Assuming that is also his accounting year, this will fall in the tax year 2010 - 2011.
I don't know why he has to fill a form for 2009 - 2010.
Dave.

[ryan mca]

Dave
 
   I thought that it was only ltd companys that could pick there tax year
and the self employed had to stick to april to april

cheers

ryan

[Jim_77]

The tax year is the tax year, your accounting date can be any date you like!  Mine is 1st March, happy new year everyone

Dave, I think Adam will still have to complete a tax return for the part year Aug 2009 to 5th April 2010, and it should have been submitted by 31st January 2011 so £100 fine if that hasn't been done

[Dave_Lee]

The tax year is the tax year, your accounting date can be any date you like!  Mine is 1st March, happy new year everyone

Dave, I think Adam will still have to complete a tax return for the part year Aug 2009 to 5th April 2010, and it should have been submitted by 31st January 2011 so £100 fine if that hasn't been done

You may be right Jim, but his accounts then won't be for a full year. Maybe his accounting year ends April 5th, so has to show for the period up to then.
My accounting year ends April 30th, this was suggested by my accountant when I first started up. Another reason I got shut of him, as this puts my tax affairs almost two years behind instead of just the one.
Dave.

[Shaun_Ashmore]

Dave my accountant can't run off with my money as they don't get hold of it, they are asked to check my accounts tally up and then calculate the tax based on my profit less any legal tax deductables that I can claim for and based on their knowledge.

Shaun