MTD

Morning Neal,

Q1 can be resubmitted but not necessary as Q2 update will replace Q1 update at HMRC. They only hold the latest update. However, if you'd like, you can resubmit Q1 by heading to the Dashboard > MTD for income tax > Click on Details beside Q1 > Click on the Clear Books tab > Resubmit to HMRC.

The capital allowances is accounting advice and is all available at HMRC. I would advise double checking HMRC's guidance or with an accountant.

The trailer purchase can just be coded to an expense account code such as Repairs and maintenance. Other plant that was purchased in prior years, as long as they haven't been claimed as an expense when purchased, will need to be claimed as capital allowances on the MTD tax return at the end of the year. You can view this by heading to the Dashboard > Click MTD Tax return under the MTD for income tax widget. Then, click Capital Allowances under your Self-Employment income widget.

You can record depreciation using a journal via Tools > Journals, it will be disallowed on quarterly updates, as capital allowances is the only way to claim that cost for tax purposes. Capital allowances has special rules for different types of capital purchase. It is the way self employment tax has been calculated for decades.

Tommy

Morning

I have spent all last night going through all of this. So looking at the Q1 I have wages showing which I have obviously used the wrong labour code - is there a way I can amend this?

In your previous message you said 'Capital allowances can be claimed on the MTD Tax return after the tax year ends. If you are using cash basis for quarterly updates, you can just record machinery and vans as a normal expense deducted straight from income.'

I am using cash basis - so i've purchased a trailer and have recorded this as plant and machinery. As for depreciation on my other plant and machinery in my workshop how do I show the depreciation as you say to claim after the tax year ends?

Thanks Neal

Hi Neal,

No problem and depreciation is not an allowable expense for tax purposes and will be automatically disallowed on quarterly updates. Capital allowances can be claimed on the MTD Tax return after the tax year ends. If you are using cash basis for quarterly updates, you can just record machinery and vans as a normal expense deducted straight from income.

If you are using accruals basis, then you must claim capital allowances at the year end. Cars have to be done via capital allowances or the flat mileage rate.

Also, if you want to record depreciation for your own tracking purposes, this can be added via Tools > Journals.

Tommy

Thank you - managed to amend all of that - just 1 more query - I have machinery and 2 vehicles where/how do I log depreciation on them please.

Hi Neal,

Yes, you may also need to enable the Labour Revenue account by heading to Settings > Account codes > Tick show in Sales for Labour Revenue > Scroll down and click Save Display settings.

Once completed, you should then be able to select this account code. And you can submit Q2 once you have amended the records as the submission will include cumulative figures.

Tommy

OK - So using Labour Revenue will this remove the amount from the wages automatically? I presume the 1st quarter that I submitted I cannot amend this?

Good morning Neal,

In this case, you can use the system default account code Labour Revenue.

Tommy

Good Morning Tommy

Thank you for your reply - I am a bit stuck with the code I need to be using then. Its repairing machinery and equipment so I am not selling a product its my time in the repairs so how should I records this?

Regards Neeal

Hi Neal,

I have taken a look, in this case, you can click on the Wages figure which will show you a list of the transactions it is made up of.

It appears you have a number of income transactions coded to your custom Labour account code. If this is incorrect, you can click on the Document number > Then click Edit and amend the account code.

Tommy

I am about to submit the 2nd quarter and reviewing it I can see theres an amount under salaries and staff expenses - how has this amount come to be there as I have not entered a wage etc for this?