Does anyone know if HMRC provides "tables" on the useful life of an asset and if the asset is then classed as "written off" in cash terms? If so could you provide link please.
I've searched their site but it all appears very vague to me.
The useful economic life of an asset will depend on the particular circumstances so there's no 'official' table to follow. For example, you might have two businesses who buy the same computer but they have different needs so one of them will happily keep using it for the next five years whilst the other business will replace it after two years. Things can also change over time so the useful economic life (and residual value) of the asset should (in theory) be reviewed periodically and adjusted when appropriate.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
That's what confused the hell out of me, it does go as an expense though, I assume it gets taken out of your profit figure again and you then use AIA, or am I barking up the wrong tree here?
That's what confused the hell out of me, it does go as an expense though, I assume it gets taken out of your profit figure again
Confused me to start with as well Steve, and then I read somewhere the phrase "Depreciation is an accounting concept, not a tax concept" and then I got it. If you think about it, if depreciation was an allowable deduction against profit, then companies could use any amount of depreciation they liked (within reason) in order to reduce their profit and subsequent tax.
I have to be honest when I first dealt with depreciation, I thought "aren't the HMRC leniant", giving you carte blanche as long as you can justify it. Now I know better
I take it the AIA rules can change from year to year then?
-- Edited by Rhianrach on Sunday 16th of December 2012 09:50:40 PM
That's what confused the hell out of me, it does go as an expense though, I assume it gets taken out of your profit figure again
Confused me to start with as well Steve, and then I read somewhere the phrase "Depreciation is an accounting concept, not a tax concept" and then I got it. If you think about it, if depreciation was an allowable deduction against profit, then companies could use any amount of depreciation they liked (within reason) in order to reduce their profit and subsequent tax.
I take it the AIA rules can change from year to year then?
-- Edited by Rhianrach on Sunday 16th of December 2012 09:50:40 PM
Yes earlier this year was £100k, currently £25k but going up to £250k from start of January. Special rules apply to AIA if your year straddles the cross over point.
Yes earlier this year was £100k, currently £25k but going up to £250k from start of January. Special rules apply to AIA if your year straddles the cross over point.
Regards
Mark
What a farce, eh Mark? Does the Chancellor (a) want businesses to invest in assets which will drive growth (fingers crossed), or (b) think that tax breaks for businesses are too lenient?
What a farce, eh Mark? Does the Chancellor (a) want businesses to invest in assets which will drive growth (fingers crossed), or (b) think that tax breaks for businesses are too lenient?
Just makes things more complicated for us having to know what period items were bought in etc though suppose keeps up busy.
Hopefully they stick with it for a couple of years but personally dont see it benefiting many small businesses as most are just trying to stay afloat at the moment.
