What constitutes an asset (computer)?

[IDontCare]

'ello everyone (this is my first post, but I lurked for a bit and I must say this forum is quite good)

I am about to buy a desktop computer together with the screen. I understand that if I spend more than 1000 pounds (net of VAT?) on an item it cannot be expensed and has to be counted as an asset and amortised.

I feel this is an undesirable outcome as it creates a more complex situation and potentially reduces the amount by which my tax will be reduced (or at least postpones it).

The thing is that my monitor and screen will be around 1250 - 1300, so above the limit. Can I perhaps consider PC and monitor as separate asset and expense them both as they would be below 1k limit? (I actually am considering buying one now and the other in a month if it makes a difference?)

If they have to be considered together I could probably bring the cost below 1200 (1k net of VAT) since I am assembling it myself. However, that excludes Windows licence, I do have an original licence for Win7 on my old personal computer. Could I transfer that one to my new PC and hence stay below the limit or do I need to buy one for my company? If I had to buy one would that go into computer cost...again bringing me above the limit?

I want to go for the optimal way of purchasing the machine while keeping everything on the level.

[malvolio]

'ello everyone (this is my first post, but I lurked for a bit and I must say this forum is quite good)

I am about to buy a desktop computer together with the screen. I understand that if I spend more than 1000 pounds (net of VAT?) on an item it cannot be expensed and has to be counted as an asset and amortised.

I feel this is an undesirable outcome as it creates a more complex situation and potentially reduces the amount by which my tax will be reduced (or at least postpones it).

The thing is that my monitor and screen will be around 1250 - 1300, so above the limit. Can I perhaps consider PC and monitor as separate asset and expense them both as they would be below 1k limit? (I actually am considering buying one now and the other in a month if it makes a difference?)

If they have to be considered together I could probably bring the cost below 1200 (1k net of VAT) since I am assembling it myself. However, that excludes Windows licence, I do have an original licence for Win7 on my old personal computer. Could I transfer that one to my new PC and hence stay below the limit or do I need to buy one for my company? If I had to buy one would that go into computer cost...again bringing me above the limit?

I want to go for the optimal way of purchasing the machine while keeping everything on the level.

I'm guessing you don't have an accountant....

An Asset is any purchased item valued above your capitalisation limit. You depreciate it's value over time at a set percentage since it is assumed that it will have a lasting value to the business but it's actual value (not its replacement value) reduces as it gets older. This is a good thing since depreciation comes off your Corporation Tax as a business expense. However, you do have to spend minutes a year working out the numbers and getting them on your accounts properly for year end.

You can of course depreciate the asset in the first year at 100% or you can set your capitalisation limit above its value (there is no legal value for this and it will vary depending on the overall value of the business: a £1500 quid box is probably valuable to you but IBM would treat it as disposable). Both would be wasting money - a hundred quid or so a year in CT relief - but avoid complications. Also VAT is not your money. It shouldn't be part of your equation.

And find the number of a good accountant. What else don't you know you don't know?

[Scruff]

There is a difference between the accounting profit and the taxable profit. You can claim allowances for tax purposes and yet for accounting purposes the asset has to be capitalised and depreciated.

Ask your Professional Accountant for the details...