Tax... Writing stuff off.

[curiousgeorgie]

Apparently my husband can knock down his (eye wateringly massive) corporation tax bill a bit with expenses.... Does anyone know what / how much you can do?

He's in IT, self employed so his corporation is just him, but for example he bought a £4000 laptop for work (designer, so was essential)... Can stuff like this be written off?

If he is trading as a limited company I would strongly advise getting an accountant as he needs to file accounts in the right format and with Companies House as well as HMRC. If he is a sole trader registered for self assessment it is probably also worth his while getting professional advice.

In answer to your question, the purchase of a computer is not a trading expense as it is a capital item. He gets to write off the cost under Capital Allowances though, I don't know the rates for this year but it normally takes 5 years or so. That will reduce his tax bill. If he has already submitted a return for last year, he will have to send an amendment within 12 months of filing.

Definitely worth getting an accountant.

Yes there are capital allowances that could probably be claimed but the standard writing down allowance is 18% on a reducing balance basis so the whole thing is never claimed. It is likely it would qualify for annual investment allowance but that depends on the paperwork etc.

There are loads of things that can or can't be tax deductible but the 'man in the pub' really hasn't spent years studying the rules and often misconceptions occur through rumour.

An accountant is likely to save you money over their fee as they will ensure you are doing everything in the most tax efficient way.

1 word - accountant!

A couple of words

accountant experienced with IT and IR35

You can expense the whole amount of the laptop in one year rather than treat it as a capital asset and depreciate it if you want, but the company must have a consistent policy and stick to it eg "items under 2k / 5k whatever will be expensed, items over will be depreciated over 3 / 5 / 7 years".

But I agree with the others - get an accountant!

NB if he's been caught by IR35, expenses like laptops are not allowed against the tax bill - he needs to speak to the PCG as well

You can expense the whole laptop in year 1 as there is a £25,000 annual investment allowance (£250,000 for 2013/14).

But yes you need an accountant who knows all this stuff and can file online accounts etc for you as well - they should pay for themselves in saved tax.

My post was not meant to look like I was correcting talkingpeace who knows a lot more than I do about these things (I'm an accountant but in a large corporation so not clued up on IR35 stuff)

AIA is absolutely correct and 99.9% the case but that bastard IR35 legislation is an utter PITA as it forces tax to be paid on turnover not profit .....

IR35 advice is essential as it will mean, if he is caught by it, paying tax and NIC at PAYE rates ie up to 45% and 12.8% NIC not the 20% Corporation tax and no NIC

Yes - he can write off computer but he should make sure he get proper advice and file accounts correctly with companies house and HMRC