Re: Capital Allowances - Short Life Assets

On 13 Feb, 10:35, Nick <N...@xxxxxxxxxxx> wrote:
Martin wrote:

"Nick" <N...@xxxxxxxxxxx> wrote in message
news:53blcaF1rn4kkU1@xxxxxxxxxxxxxxxxxxxxx
I have a laser printer which although only just over a year old needs
a new
drum, however it is cheaper to buy a new printer than replace the drum
(cheaper because I get new toner with a new printer).

BTDTGTTS :-)))

Now I'm doing my corp tax and have to put aforementioned laser printer
down as a new asset, obviously it hurts to put it into the general pool
when it is already ready for disposal at zilch to the dump.

So for capital allowances purposes I've read about short life assets
which
seem to allow me to put the printer in its own separate pool.

This allows me to depreciate the printer at 50% for the first year.

Only if acquired during the y/e 31/3/05. It's been 40% since then.

Whoops. I missed that, ok for y/e 31/3/05 and y/e 31/3/07 but not
31/3/06. I sometimes feel that Gordon tinkers about with these rules
purely to trip me up.





Then depreciate the printer at 12.5% (25% of remaining 50%) for the
second
year. Then also in the second year I can throw it away and enter a
"balancing allowance" for the remaining 37.5%.

You would actually claim the whole of the remaining 50% as a BA in year 2 -
although the distinction doesn't actually show in the CT600.

Then in my tax computation the balancing allowance is used in the same
way
as a capital allowance to reduce profit as part of the "Schedule D
case 1"
calculation. So basically I'm getting 50% allowance for the first year
and
50% allowance for the second year.

I think I have understood OK so far (please correct me if I haven't). But
I have a couple of questions.

1) In order to treat the printer as a SLA I need to make an "Election" in
writing to the revenue. But I'm not sure where or how this election is
made.

Some "written elections" are accepted by c=virtue of being on the return
(e.g. cap.ex. generally) but I think this one is just a one paragraph
letter
to your friendly tax inspector.

2) Nearly all of my IT equipment gets binned in under four years. So I
would like to treat it all as short life assets. That is unless making an
election is overly onerous. I have a very small company so maintaining
separate pools is trivial. Would there be a problem with this?

No - if you don't mind making the written election each time.

Presumably I just include this letter with the CT600 and I can do one
letter per year for all SLA items added that year. I can even do it
every other year.

I assume you've already read
http://www.hmrc.gov.uk/manuals/camanual/CA23600.htmand the following few
pages...?

HTH

Yep, thanks.- Hide quoted text -

- Show quoted text -- Hide quoted text -

- Show quoted text -

10 years ago i was being told by Chartered Accountants I worked for
never to capitalise anything under £400.

Your printers are sort of "loose tools" so just expense them in future.

.