Plant and Equipment

Question asked by James Cartwright 6 years ago

I've listed some computer purchases for my business under 'plant and equipment' and have noticed that they don't appear in the profit/loss statement. Because they were not in the list i've not put them down as an expense on my tax return. Is there are reason for this?

So basically if i want to write off the computer equipment in a single year rather that depreciating it, should I list it as 'materials' or something else?

Thanks, James

7 Replies

HMRC would have you believe anything with a life expectancy greater than 12 months needs to go on the balance sheet as opposed to being expensed through the P&L like you're proposing. However, most businesses will use a bit of common sense and set down some kind of limit - £500 seems to be the in thing but I guess it depends on the size of your business. I wouldn't expect Sainsbury's to put a £1k computer on their balance sheet but probably would a small business.

Whatever you decide, there's no loss of tax to HMRC either way so I very much doubt it's going to cause you much of an issue.

Here's a bit of bedtime reading if you're really bored http://www.hmrc.gov.uk/capital-allowances/basics.htm

Plant and equipment is a balance sheet item that should be depreciated through the accounts and should most likely be claimed within your tax return under the Annual Investment Allowance section.

Thanks for the reply, I don't really know what that means, so is there another option I can choose so that it appears as an expense on my profit/loss?

Without getting too detailed, what items did you purchase and at what cost?

Computer which cost just over £1000 and approx £500 of miscellaneous computer equipment. Also a pillar drill and a couple of other small tools. I was advised to just write off anything under £1000 in the same year rather than say depreciating over 3 years.

Also maybe £200 of computer software.

HMRC would have you believe anything with a life expectancy greater than 12 months needs to go on the balance sheet as opposed to being expensed through the P&L like you're proposing. However, most businesses will use a bit of common sense and set down some kind of limit - £500 seems to be the in thing but I guess it depends on the size of your business. I wouldn't expect Sainsbury's to put a £1k computer on their balance sheet but probably would a small business.

Whatever you decide, there's no loss of tax to HMRC either way so I very much doubt it's going to cause you much of an issue.

Here's a bit of bedtime reading if you're really bored http://www.hmrc.gov.uk/capital-allowances/basics.htm

Hi James,

Kevin is right and explains it very well indeed. That's the way we would recommend that you do it too. Thanks as always, Kevin.

Chris

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