Help with self assessment and capital allowances

[Accountingnovice]

I know I should speak to an accountant as I am clueless but at the moment my income doesn't justify it.

I've done self assessment before and it's been easy as it has just been for freelance work.

I am now setting up a second sole trader business in this tax year. It's a different kind of business where there will be more in the way of outgoings than I've dealt with before. There has already been capital expenditure in 2018/19. Does that need to go as capital allowances in the 2018/19 self assessment which I will complete shortly, even though I wasn't trading or can it be carried over to 2019/20? What are the implications?

Any help much appreciated.

Bump

bump. I also don't understand capital allowances and consequently have probably paid more tax than I should for years!

If you incurred the expenditure in 2018/19 without any income, the annual investment allowance will create a loss in the new business which can be offset against profits in the old one. The annual investment allowance lets you offset the full cost in the year of purchase.

However, if you decided to carry the purchase forward to 2019/20, it would go into a capital allowance pool, which would spread your claim out over a number of years. Although I don't know your full circumstances, I would usually advise again this and claim the Annual Investment Allowance in 2018/19, as it's usually beet to get the tax relief sooner rather than later.

It does depend on what your other income and tax liability is though for 2018/19. If your income do any warrant an accountant it unlikely you pay much in the way of tax. I would personally carry the capital expenditure and claim it as written down allowance against future profits of that specific self employment. Alternatively you can restrict the amount of allowances you claim to reduce your tax liability to nil, and then carry the rest forward.