Random accounting question...

[Souljas]

Hi, I am running a small e-business through university and am doing my first tax return to the HMRC in UK. As I have a turnover less than 30,000k I essentially only have to do an income statement and no balance sheet.

My problem is that I have bought a computer for my work which would normally be put on the balance sheet as an asset and depreciated on the income statement, however if I am just making an income statement can I just put it under expenses?

Cheers

 

[bgd]

Just the depreciation on the income statement. The computer is still an asset regardless of whether you prepare a balance sheet or not.

 

[Ttownbeast]

anything tax law allows you to deduct as a business expense you should probably look up on the IRS website rather than bothering to find answers for here is the best advice I can give...otherwise hire an accountant and have them worry about it.

 

[AppleMatt]

Just the depreciation on the income statement. The computer is still an asset regardless of whether you prepare a balance sheet or not.

+1. It's a depreciating asset. If you put it down as an expense you're misleading the Revenue, who consider an expense to be something with the capability of recurrence (i.e. electricity bills, toner cartridges...).

I think you should be entitled to a 100% exemption under the annual investment allowance, or AIA (assuming you haven't spent over £50,000 on plant and machinery). You'll find these rules in Part Two of the Income Tax (Trading and Other Income) Act 2005, but as Ttownbeast said your best bet is contacting the Revenue. I'm sure they answer these questions all the time.

In future, as bgd said, I wouldn't put it as an expense: Apart from the deception aspect you'd be throwing your AIA out of the window. Looking forward, this will also make it easier as you buy and sell more assets; you can 'pool' them and just deduct the depreciation each year from the pool rather than itemising them individually (after deducting your annual and first year of purchase allowances).

AppleMatt