Annual Investment Allowance

[Maf. King]

On Sat 14 June 14 11:06:56 you wrote:
> Hello Maf,
> 
> Thank you for your reply.
> 
> My computer equipment has been put down as "annual Investment Allowance"
> by the HMRC,
> 
> I have had a look on the internet and found the following page on the
> HMRC web site: http://www.hmrc.gov.uk/capital-allowances/plant.htm#3
> 
> Any help would be much appreciated as I am still in the learning curve.
> 
> Hope all is well your end.
> 
> 
> 

Hi Paul,

Please include the GC list in your replies -  others on the list may benefit 
from the discussion, and there are also others there who may be able to offer 
advice more speedily (and correctly!) than me.

It is a while since I had to worry about this, so my main advice is for you to 
talk to your accountant to confirm this...


IIRC, you still have to keep track of the Capital Assets in a pool in the 
usual way, the difference is at the point of filling in the Corporation Tax 
return, where you are allowed to claim all the capital costs as tax 
deductible, rather than just the 25% depreciation.

So if you have spent £1000 on some asset, you record it in a capital asset 
pool, and reduce the value of that pool by 25% each year (or whatever HMRC 
guidance for computers is - possibly straight line as they have relatively 
short-life expectancy?)

However, the Investment Allowance means that you can claim the full £1000 as 
deductible, rather than the £250 depreciated during the tax year.  I can't 
remember without looking it up, but I think that the capital allowances are a 
separate box/calculation on the return, which is where you use the allowance.

If all that is correct, then you probably would just record the purchase to 
something like Assets:CapitalEquipment:2014-100%-allowable (which allows you 
to track the residual value in the pool) and at tax calculation time, you 
bring the allowance in to the tax calculation.  In other words, I don't think 
there is anything (except possibly creating a new capital pool) special to do 
in GC.

HTH,
Maf.