Plant and Equipment

Question asked by James Cartwright 10 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

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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

Best answer
10 years ago

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.

10 years ago

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?

10 years ago

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

10 years ago

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.

10 years ago

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

Best answer
10 years ago

Thanks for you help, that's brilliant. :)

10 years ago

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

10 years ago

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