account advice

[Dr.Green]

just doing my accounts at the mo 2011/12 , yeah , leaving to last minute but defo not due to pay any tax, business is very small so not alot of paper work so can do my self assesment on my own this year.

 

everything is fine appart from 1 question id like a bit help on - some may say get an accountant , i will do for 2012/13 as got loads of paperwork and possible yard purchase too.

 

i took out a loan for 5.5k - i bought my chipper ..

 

as i didnt buy my chipper with money from business and took a loan under my own name as much cheaper rate, do i just put the reciept in for chiper and put down the monthly payment as an outgoing over the duration of the 2 years.

 

might sound like a simple thing but id like to check , cheers:thumbup1:

[JamesNI]

I'm no accountant but as far as I know, that is a capital expense (as in it will last a number of years and have a resale value) it will be written off at 20% of the value over five years or something similar. The hmrc website is a good place to search, I just finished my accounts, I feel your pain!

[Wolfie]

Thankfully been out of the accountancy game for a number of years now but this is how i remember it.

 

As said, the full cost of the chipper will be put though your accounts as a fixed asset and devalued over a number of years. As it will almost certainly have some resale value when disposed off i would suggest either 20 or 25% reducing balance method (ie, yr1 - 20% of £5500, yr2 - 20% of the remaining £4400, yr3 - 20% of the remaining £3520, and so on).

Choose the method/% that will most accurately reflect the market value of the machine throughout it's life. It won't change the amount of tax allowance you will get on the purchase as this is done a different way by HMRC for the tax return. To make it nice and simple, the inland revenue keep changing the capital allowance so you will have to check their website to see what it is for the 11/12 tax year.

 

Regarding the loan, as long as it was 100% for the chipper then you can claim the interest on the loan as a business expense.

 

Hope this has helped but know it's probably just confused you. That's why people use accountants.

 

Self assessment tax returns! - yeah, right.

[Dr.Green]

ok - as soon as you mention %%%%% this year that year , think il get my bro's accountant in on monday

 

thats the only item i have struggled with , but i supose there are other items like my tipper purchase to that would fall under same catigory

 

cheers chaps , thanks again

[Quickthorn]

You might be able to treat the whole thing as Annual Investment Allowance. I think the limit is £25,000 at the moment. That means that the whole £5.5k could be offset against profits.

 

I'm sure your brother's accountant will explain it better than I can.