Self Assessment - Capital Allowances or business expenses?

suhailc · 31st January 2008

Hi,

Quick question for those who are familiar with this in their accounting as I'm having a dispute with someone over the correct classification for these things as it's SA deadline day today:

Computer hardware & components - qualifies for capital allowances?
Server hardware & components - capital allowances or business expenses?
Rackspace rental - business expense?
Server rental - business expense?
Software rental(such as helpdesk software) - business expense?
Domain registration - business expense?

Any advice would be much appreciated.

edb49 · 31st January 2008

Computer hardware & components - capital
Server hardware & components - capital
Rackspace rental - expense
Server rental - expense
Software rental(such as helpdesk software) - expense
Domain registration - expense

Basically if you pay for a service it will be an expense. If you pay for something of value that you can keep, it's a capital purchase and should be treated that way.

If you register a domain for a long long period you may be able to treat it as a capital item, check with your accountant.

suhailc · 31st January 2008

Many thanks Ed!

aguk · 31st January 2008

I know a company that treats its domain as an asset.

They have the asset value down as one years turnover from the domain. Seems to be the only way they can make their balance sheet solvent. Think the only people they are kidding are themselves.

TDMWeb · 31st January 2008

Honestly? You really need an accountant: let them do what they do best while you do what you do best.

FWIW I agree with Ed. Software purchase is grey: can be treated as capital.

Cyberprog · 31st January 2008

I think owned licenses are capital purchases (my helm purchases were done as such) but anything rented monthly (spla etc.) is an expense.

othellotech · 1st February 2008

Quote:

Originally Posted by TDMWeb

Software purchase is grey: can be treated as capital.

Accountancy guidelines for companies subject to audit, are that software is not an asset and should not be treated as such, due to licencing terms and restrictions - so it's an expense for a PLC

markcastle · 1st February 2008

Quote:

Originally Posted by TDMWeb

Honestly? You really need an accountant: let them do what they do best while you do what you do best.

Aye to that.

[inx]Olly · 1st February 2008

THIS USER HAS BEEN GAGGED BY THE FORUM HOSTS FOR SPAM OR BREAKING THE RULES...
User will be ungaged in around 78 hours from this post.

burble · 1st February 2008

Software is an expense if it has a life expectancy of under two years, otherwise it is capital. So says the HMRC.

Hardware is business machinery, so is capital.

Probably a bit late for this year though - only 11 hours and 30 minutes left to submit

aguk · 1st February 2008

Quote:

Originally Posted by TDMWeb

Honestly? You really need an accountant: let them do what they do best while you do what you do best.

Yep definately.

Christ I think I did mine back in June. Accountant read it through with me I signed it job done.

Took about 10 minutes of my time.

markcastle · 1st February 2008

Accountant did mine. About 30 secs to skim read and sign it

alexcf · 4th February 2008

Ditto..

alexcf · 4th February 2008

Oh, for you who don't know, if you *are* a company Director you are *required* to do a return

JamieBeeston · 4th February 2008

Anyone earning > 40% threshold is typically also required to file a return regardless of being a director or not.