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"capital allowances" - how do they work? and for how long?

(13 Posts)
riksti Sun 05-May-13 19:55:31

It's fine to claim 18% if the item is broken.

If you bought it before but is now a trade asset then you can never claim AIA but you can claim 18%.

Small pool... If your sum total of all assets is less than £1,000 (this is value of assets when introduced less any 18% deductions you've claimed over the years) then you can write it all off in one go.

tonyf Sun 05-May-13 12:56:53

How does "Small Pools Allowance" work?

tonyf Sun 05-May-13 12:51:43

"No time limit, as long as it's still used in the trade."

What if buy a tool and it breaks for example, but you haven't earned enough for it to be worth claiming for AIA, but you've kept the receipt for it - can it still be used later as WDA?

"No time limit, as long as it's still used in the trade."

So I presume it is from when you go into business yourself? And not before?

----

Also thanks for your answers. Really helpful.

riksti Sat 04-May-13 14:20:43

No time limit, as long as it's still used in the trade. And you don't have to claim every year, or even the whole amount. You can only claim £50 in one year, instead of £126, for example

tonyf Sat 04-May-13 11:59:14

great. very helpful. is there any time limit on how long ago i bought something? and do you have to claim back in consecutive years? for a £700 laptop could i claim back £126 (18% of £700) in 2012/13 then wait again til 2015/16 and claim back £103 (18% of £64).

riksti Fri 03-May-13 22:12:46

Not recently. These rules came in in 2009, I think, and the rules before that weren't that different from what I remember.

tonyf Fri 03-May-13 22:04:23

great. i think i understand this now. and it doesn't matter, i presume if you've bought more than one big item. you just follow that above theory.

"You can't claim aia in 2012/13 if you didn't buy them in 2012/13. If you bought the computer before but didn't claim AIA back then, then in 12/13 you can only claim 18% of the cost and carry forward the balance."

were the rules different before? did it use to be the case you could hold receipts back and claim the whole lot as a capital allowance as soon as you were making enough money for it to be worthwhile to do so?

riksti Fri 03-May-13 21:54:17

Yes. If you bought a £700 laptop some years ago and didn't claim any AIA then you can claim £126 (18% of £700) in 2012/13 and £103 (18% of £574) in 2013/14 and so on.

tonyf Fri 03-May-13 21:27:42

"You can't claim aia in 2012/13 if you didn't buy them in 2012/13."

I haven't bought things for 2012/13.

"If you bought the computer before but didn't claim AIA back then, then in 12/13 you can only claim 18% of the cost and carry forward the balance."

Okay so say I start making enough money for it to be worth dealing with these receipts (thus far I haven't) - say I bought a laptop for £700, I can claim back 18% of £700 for the tax year 2013-2014 (if i'm making enough money in that tax year for it to be worthwhile dealing with this).

And then what happens? Do I get to claim back (if I want to and again its worthwhile dealing with this) 18% of 82% of £700 in the tax year 2014-2015. Then in the same pattern 18% of 82% of 82% of £700 in the tax year 2014-2015.

Or have I just totally lost the plot?

"In 13/14 you can claim 18% of the balance + 100% of the cost of any new qualifying assets that you buy."

riksti Fri 03-May-13 17:41:28

You can't claim aia in 2012/13 if you didn't buy them in 2012/13. If you bought the computer before but didn't claim AIA back then, then in 12/13 you can only claim 18% of the cost and carry forward the balance. In 13/14 you can claim 18% of the balance + 100% of the cost of any new qualifying assets that you buy.

tonyf Fri 03-May-13 11:18:53

"The claim for assets in the year on purchase is called annual investment allowance (AIA)."

well i've held back receipts from the last few years. i haven't bought anything like a computer in the tax year 2012-13.

"If your total income before capital allowances is below your personal allowance then there's no point in claiming capital allowances as you're already not paying any tax and any further deductions aren't going to help."

that has been the case in previous years, thus why i have a number of receipts for things.

"If you don't claim the AIA in year one then in year two you can claim 18% of the balance. You can't claim the whole cost anymore."

now i'm a bit confused... a) what does this actually mean and b) when did things change and c) what if i have receipts for example before the way things were done changed

riksti Thu 02-May-13 22:32:24

You can claim up to £250k in capital allowances per your accounting year for items bought after 1 jan 2013 (plus a percentage of the brought forward balance). The limit was different before January. The claim for assets in the year on purchase is called annual investment allowance (AIA).

If your total income before capital allowances is below your personal allowance then there's no point in claiming capital allowances as you're already not paying any tax and any further deductions aren't going to help.

If you don't claim the AIA in year one then in year two you can claim 18% of the balance. You can't claim the whole cost anymore.

AIA is not available on cars, only the 18% (or 8% if emissions over 160 g/km) writing down allowance is available on cars.

tonyf Thu 02-May-13 17:18:29

my memory's a bit fuzzy, but i seem to remember that if you buy things like computer equipment (and things which aren't utterly disposable like paper) - that they would be considered "capital allowances"...

and also that if you haven't basically made much money, that it was okay to keep the receipts of these for a number of years (can't remember how many years it is/was though - anybody know?) and these type of expenses could be used to reduce my tax bill in a future year.

anybody know more about this? or could redirect to me the right hmrc page? or know how many years that you can hold over these type of expenses for?

On another part of mumsnet somebody posted:

"You don't have to claim capital allowances in any particular year and if you don't then the pool balances carry forward indefinitely, or until you stop trading."

Is this correct or incorrect?

They also posted this bit as well:

"Special rules apply for private cars and certain other assets, but for general things like computers any amount not claimed as Annual Investment Allowance goes into a General Pool and you can claim Writing Down Allowance on the balance of this pool at the rate applicable in a future year (currently 18%), or Small Pools Allowance for the whole balance if this is no more than £1,000. Note that you can only claim Annual Investment Allowance in the year you purchase an item, so this is not he same as just "holding over" recognition of an expense, which is not allowed."

Some of what has been said in the above paragraph though, I don't understand. Just the language is a bit over-my-head. It's a bit accountancy-ese for me. I guess for me to understand such things it would need to be in more idiot proof terms probably.

am self-employed

thankyou

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