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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a small balance sheet compiled by an accountant, the

Customer Question

I have a small balance sheet compiled by an accountant, the final figures will be placed on my self assessment tax return. The accountant has listed the sum of £542 under the heading "capital allowances" and has a note beside this figure - "Allowance for Small Balance of Unrelieved Expenditure" I can't see from the figures where the accountant has got the sum of £542 from as how it's compiled is not identified on the balance sheet, but of course may be in the accountant's personal notes.

can you explain this to me ?
Submitted: 3 years ago.
Category: UK Tax
Expert:  Tony Tax replied 3 years ago.
Hi.

The capital allowance won't be on the balance sheet. It will be in his capital allowances computation. If the written down value of the business equipment is less than £1,000 you can claim it as a single allowance so as to avoid having to make ever smaller claims for capital allowances as the written down value reduces further.

Let me know if you have any queries.
Customer: replied 3 years ago.

I am trying to understand where the capital allowance figure on my last year's balance sheet comes from, so to try to help me obtain that exact answer i outline the return made to the inland revenue for 31st March 2010.

Self Employment Details;

 

Gross Profit £10,272

 

Expenses;

Cost of sales £267

Premises Costs £80

Repairs £616

General Administrative

Expenses £1495

Motor Expenses £2888

Travel & Subsistence £122

Legal & professional £299

costs £299

--------

£5,767

 

£10,272

£5,767 -

----------

£4505 net profit

Tax adjustment

to net profit

capital allowance

summary;

allowance for small

balance of

unrelieved

expenditure £542 -

----------

net profit for tax

purposes £3963

----------

 

The General Administrative Expenses figure of £1495 is made up of the following;

Stationery & Advertising £477

Telephone £373

Postage £94

Use of House £500

Sundry Expenses £51

---------

£1495

 

From the self assessment figures from the tax year ending 31st March 2009

I note that the Capital Allowance figure introduced was £485

 

I supplied the accountant with a cash book with columns with the various headings

i then enter the various amounts detailed here accompanied by all the invoices.

But despite what you say so far, I still can't understand how arithmetically the

capital allowance figure of £542 is arrived at from the figures i have supplied in this past tax year. Can you tell me, and that will give me hopefully MY ANSWER.

 

Customer: replied 3 years ago.

I am trying to understand where the capital allowance figure on my last year's balance sheet comes from, so to try to help me obtain that exact answer i outline the return made to the inland revenue for 31st March 2010.

Self Employment Details;

 

Gross Profit £10,272

 

Expenses;

Cost of sales £267

Premises Costs £80

Repairs £616

General Administrative

Expenses £1495

Motor Expenses £2888

Travel & Subsistence £122

Legal & professional £299

costs

--------

£5,767

 

£10,272

£5,767 -

----------

£4505 net profit

Tax adjustment

to net profit

capital allowance

summary;

allowance for small

balance of

unrelieved

expenditure £542 -

----------

net profit for tax

purposes £3963

----------

 

The General Administrative Expenses figure of £1495 is made up of the following;

Stationery & Advertising £477

Telephone £373

Postage £94

Use of House £500

Sundry Expenses £51

---------

£1495

 

From the self assessment figures from the tax year ending 31st March 2009

I note that the Capital Allowance figure introduced was £485

 

I supplied the accountant with a cash book with columns with the various headings

i then enter the various amounts detailed here accompanied by all the invoices.

But despite what you say so far, I still can't understand how arithmetically the

capital allowance figure of £542 is arrived at from the figures i have supplied in this past tax year. Can you tell me, and that will give me hopefully MY ANSWER.

 

Customer: replied 3 years ago.

I am trying to understand where the capital allowance figure on my last year's balance sheet comes from, so to try to help me obtain that exact answer i outline the return made to the inland revenue for 31st March 2010.

Self Employment Details;

 

Gross Profit £10,272

 

Expenses;

Cost of sales £267

Premises Costs £80

Repairs £616

General Administrative

Expenses £1495

Motor Expenses £2888

Travel & Subsistence £122

Legal & professional £299

costs

--------

£5,767

 

£10,272

£5,767 -

----------

£4505 net profit

Tax adjustment

to net profit

capital allowance

summary;

allowance for small

balance of

unrelieved

expenditure £542 -

----------

net profit for tax

purposes £3963

----------

 

The General Administrative Expenses figure of £1495 is made up of the following;

Stationery & Advertising £477

Telephone £373

Postage £94

Use of House £500

Sundry Expenses £51

---------

£1495

 

From the self assessment figures from the tax year ending 31st March 2009

I note that the Capital Allowance figure introduced was £485

 

I supplied the accountant with a cash book with columns with the various headings

i then enter the various amounts detailed here accompanied by all the invoices.

But despite what you say so far, I still can't understand how arithmetically the

capital allowance figure of £542 is arrived at from the figures i have supplied in this past tax year. Can you tell me, and that will give me hopefully MY ANSWER.

 

 

P.S. In the first reply i sent i think in the expenses column i may have entered

the figure of £299 legal and professional expenses twice by error.

 

Expert:  Tony Tax replied 3 years ago.
Capital Allowances are just that, allowances for capital expenditure.

If you buy equipment for your business, say six computers that cost £400 each, that adds up to £2,400. You have three choices:

1 Claim all or some of the expenditure as an allowance against your profit for one year under the annual investment allowance rules.

2 Claim 20% (£480) of the expenditure and carry the balance forward (£1,920) for use in future years. In the following year, you'd claim £384 and carry forward £1,536.

3 Make reduced claims. ie less than the maximum you can claim.

When the balance on unclaimed expenditure in the pool reaches less than £1,000 you can claim it all reducing your written down value to nil.

The allowance isn't arrived at from the figures you provided as they are revenue items, ie income, as opposed to capital items which is what a purchase of equipment is. The balance of £542 was unclaimed capital expenditure brought forward from the previous year.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14266
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and 4 other UK Tax Specialists are ready to help you
Customer: replied 3 years ago.
No I am only prepared to pay the sum of £11.00, i requested a fuller answer to my original question which was to explain the capital allowance figure showing on my last year's income tax self assessment return. if your FIRST ANSWER had contained the detail GIVEN in the follow up i requested there would have BEEN NO REQUIREMENT FOR ME TO ASK FOR CLARIFICATION "RELEVANT TO MY ORIGINAL QUESTION"
Expert:  Tony Tax replied 3 years ago.
I'm not asking you to pay again. Many people ask follow up questions and pay just the once, it's no problem. All the information you put in your follow up wasn't needed. I did explain where the figure came from first time around. All you needed to do then was contact your accountant and ask for a copy of the computation.

I'm opting out. Many people ask for further clarification and I'm happy to give it. That's the nature of trying to explain things to people who aren't expert in a subject in a forum such as this. Some get it first time, others need further explanation.

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Inc Tax, CGT, Corp Tax, IHT, VAT.