fixed assets or expense fixed assets or expense - Page 2
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  1. #11

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    I know some people use a purchase price threshold for determining whether to treat something as an asset or an expense - IMO the logical approach is to base it on whether the item will have any significant value after the first year.

    If it's something intended to be used over a reasonable period of time and will retain value beyond the year in which you purchased it then it makes sense to me to treat it like an asset and keep it on the balance sheet. If its consumable or has a short lifespan or negligible value after a year then I'd treat it like an expense.

    I'm not sure if there's a hard and fast rule about it. I'd treat a cheap desk (e.g. something from Ikea) < £200 as an expense but an expensive motorised standing desk costing upwards of a grand as an asset. A desk fan would be an expense, air con (including installation) an asset. I've treated mobile phones as both assets and expenses in the past but would generally treat them as assets these days.

    Dealing with capital allowances and depreciation isn't really that complicated - most bookkeeping software like FreeAgent will handle it for you. In short you claim 100% allowances in the first year under the AIA, then depreciate it over x years depending on the asset, with the depreciation being non-deductible for corporation tax purposes. If you sell the asset then you need to deal with a balancing charge but your accountant should be able to deal with that for you.

    The only other thing to bear in mind is if you ever decide to MVL and close your business down, most "cheap" MVL services will require you to get rid of all non-cash assets first. This could be done by selling them to yourself - it can be a paper transaction where you raise an invoice and credit the amount to the director loan account, then clear this with a dividend - but you'll need to account for VAT on the sale and handle the corporation tax balancing charge. Again, your accountant should be able to deal with this.
    Last edited by TheCyclingProgrammer; 19th October 2020 at 15:26.

  2. #12

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    Quote Originally Posted by TheCyclingProgrammer View Post
    I know some people use a purchase price threshold for determining whether to treat something as an asset or an expense - IMO the logical approach is to base it on whether the item will have any significant value after the first year.
    I think that's a reasonable approach too. Consistency is more important that the precise details, imho. There isn't a definitive/legislated approach, otherwise we'd all use it. The only illogical thing to do would be to vary your approach or have no particular methodology.

  3. #13

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    Thank you guys so .... much for the comments, so I will just keep them as assets as they are 500 pounds so makes a bit sense. Depreciation is non-deductible for corporation tax purposes so it sounds not that complicated.
    BTW, I cannot find where to put the training cost (required for the job) and the Mileage Allowance?

  4. #14

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    You don't have to detail such things out on the CT600 - my accountant doesn't. Just scanning through my most recent one, it's just got turnover, profit and CT due and then the accounts are attached to show the detail.

    Perhaps ask your accountant for help?

  5. #15

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    Quote Originally Posted by dc1234 View Post
    Thank you guys so .... much for the comments, so I will just keep them as assets as they are 500 pounds so makes a bit sense. Depreciation is non-deductible for corporation tax purposes so it sounds not that complicated.
    BTW, I cannot find where to put the training cost (required for the job) and the Mileage Allowance?
    You really are struggling with the basics here aren't you.
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  6. #16

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    Quote Originally Posted by northernladuk View Post
    You really are struggling with the basics here aren't you.
    yes absolutely, it is my first time to do these, so need to learn a lot of very basic things

  7. #17

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    Quote Originally Posted by ladymuck View Post
    You don't have to detail such things out on the CT600 - my accountant doesn't. Just scanning through my most recent one, it's just got turnover, profit and CT due and then the accounts are attached to show the detail.

    Perhaps ask your accountant for help?
    ok, thanks a lot, seems like I need an accountant.

  8. #18

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    Quote Originally Posted by dc1234 View Post
    yes absolutely, it is my first time to do these, so need to learn a lot of very basic things
    Are you doing your own accounts and corporation tax return?

    If so stop and find an accountant because you don't have enough knowledge to do it correctly as you don't even know what you don't know.
    merely at clientco for the entertainment

  9. #19

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    Quote Originally Posted by eek View Post
    Are you doing your own accounts and corporation tax return?

    If so stop and find an accountant because you don't have enough knowledge to do it correctly as you don't even know what you don't know.
    OK, I will.

    Yes I am filing my first account and corporation tax return, thought I managed the self assessment might be able to do these myself as well.

  10. #20

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    Seems not.
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