Re: 04/05 tax return
- From: Ronald Raygun <no.spam@xxxxxxxxxxxxxxxxxxxxx>
- Date: Mon, 16 Jan 2006 12:01:13 GMT
Reestit Mutton wrote:
> (1) Pre-existing equipment.
>
> I originally purchased a computer, router, printer etc... for another
> purpose prior to starting the website.
Was this "other purpose" a business? If so, and you chose not to bother
claiming capital allowances for the equipment in that business before
transferring it into the current business, then you could probably
treat the equipment as introduced at its original purchase cost. If not,
i.e. the purpose was private, it might be more honest to introduce it at
market value.
> However, since the website
> started these items have been used solely for the website business. How
> can I account for their depreciation in my return?
You don't "account for depreciation" at all, except for your own
internal purposes if you wish. For tax purposes, you claim capital
allowances instead. You refer to them below as depreciation allowances
and you may like to think of them as being just that, however, the
correct name for them is capital allowances.
> e.g. if they were
> originally purchased in the 2002/2003 tax year for, say, £2000 what
> value would be ascribed to them if they were brought into the business
> in the 2003/2004 tax year
As discussed above, either £2000 or any reasonable market value
figure. The former would of course be better for you, assuming you
have taxable profit against which it makes sense to set these
allowances.
> and, assuming that these items have never been
> depreciated on any previous tax return, would I be allowed a first year
> depreciation allowance against them in the 2004/2005 tax year?
Not sure. I suspect FYA on computing stuff (40%) are only available if
the equipment was bought new in the year of claim. This would mean you
could only claim 25% CA. And then 25% of 75% next year and so on.
> (2) NI
>
> If my earnings were, say, £10,000, would class 4 NI liability be £420.40
> (8% on the earnings above £4745) or £800 (8% on all earnings)?
The former.
> Also, I have been a little remiss about notifying the IR about my
> self-employed status. I know that this means that I will ahve to pay a
> £100 fine. Anyway, I know that there is a SEE for those earning not very
> much. Is this exemption limit fixed regardless of the percentage of the
> year that the business was operational or will it be rated pro-rata? The
> reason I ask is that the business started sometime during the 2003/2004
> tax year and the income from the website that year was below this
> threshold. However, the website income would be above the pro-rata rated
> amount.
>
> To clarify things...if the business was only operational for, say, the
> latter half of the tax year and by April it had earned just below the
> SEE limit, would I be exempt from NI for these earnings for that year.
I don't think the small earnings exception is pro-rated, and so that
would mean that provided the earnings in the tax year were below it,
you would not be required to pay class 2 NI. But it doesn't necessarily
mean you'd be exempted from notifying IR of your SE status.
.
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