[dave0123]

Hi lads,

had someone ask me a intresting question before which i dont really no myself" here goes.

With the capitol expenses such like cars vans and say computers do you still claim the % of these if your profit is less than £5.000?

so for example your profit is £3000 for the year because your allowed to make 5000 tax free does that mean you have to earn over 5000 before you start claming any of your % of vans computers etc.

Dave

[Ian Lancaster]

I think you need to ask an accountant, but I'm sure that if you've made a lot of capital investment but not enough profit to pay tax, then you're allowed to "roll over" the amount into the next year

[D.Salkeld_Ltd]

Dave,

As I see it Capital Expenses are a tax deductible expense.  So you would you would add "Depreciation" as an ordinary expense.
How you do it is like this.

(Example)

Capital Account
ITEM                       VALUE AT YEAR END
Van                               £8000
Equipment                     £1500
Computer                         £300

TOTAL                          £9800

Depreciation
at 20%                        £1960

Value
Carried over                 £7840

EXPENSE ACCOUNT

Day to Day                   £3500
Depreciation                £1960

TOTAL                          £5460

See...............Easy Peasy

David

[Ian Lancaster]

David,

That's fine, but if you haven't made enough profit to attract tax, can you roll over the expense account into the next year?

[dave0123]

I understand what your saying david.

But as ian says! if you havent made any profits over 5000 to pay tax does it roll over? i got asked this question and i didnt really no! by another window cleaner.

Dave

[twt]

i don't think old david read the post properly.
i think its the drink.

regards the post serval years ago i didn't claim depreciation for some equipment but my accountant has put it through for me last  year tax (2006/2007) year so i would think it will be better to save these expenses for when you earn enough to pay tax as otherwise you are wasting the tax relief you you could claim in the future. I would still recomend seeing an accountant though.

[dave0123]

Thanks phil,

Its not for me but ill pass the info on! and advise him to see an accountant.


Dave

[L.J.Thorpe]

excuse me for being thick but surely you deduct capital allowances/depreciation etc from gross for year? ???dont you "profit" is whats left after all expenses have been deducted so its your gross amount that matters not "profit" which is just your net earnings for the year is it not or am i not getting the point of this. for this tax year(2007-2008) capital allowance is 50% in first year not sure after that tho but surely this is deducted from topline not net

[dave0123]

The lad has not been going long.

the turnover is obv more than 5000 thats just his profit for since he started

[dave0123]

i no there not stupid

to be fair the lads only young! just started window cleaning proberly not too great at pricing he has earned money!! not much of course most of it has gone to expenses ond buying his car insurance ladders to work.

I no there not stupid hes not hiding anything!! they could even go round and check his accountants. How i see it is its great hes having ago not trying to avoid paying tax.

[L.J.Thorpe]

the point is you deduct capital allowance from topline/gross/turnover whatever you want to call it "profit" is your net earnings after deductions if his "profit" for the year is 3k then he pays tax on 3k any allowance for capital exp is deducted before you come out with a figure for "profit" which is net earnings so you dont claim for anything against "profit" you claim it against turnover

[twt]

i think people are spliting hairs here if the lad has got his profit below 5000 without claiming capital allowances then if he can he would be better putting the capital allowances throught another year when has has earned enough to pay tax on his profits  because it will be more of a tax advantage.

[Pole2pole]

I found myself an accountant today after 3 years of self assessment. The reason? I really can't be ars*d to kill myself once a year(yeh just after christmas and starting a new year) worrying about this any more. £200+vat. Two days work...or one very good one to save all this hassel. I think age is creeping up on me cos the more i look at them forms now,the more they look like it's written in Dutch.