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Tax cuts funded from within the CT system
'The large print giveth and the small print taketh away!'
“Annual Investment Allowance” removes the need to track capital
I like the “Annual Investment Allowance” as for small consulting companies (e.g when the none wage expenditure is less then £50,000, and there is no stock being hold) there is no need to separate capital expenditure from revenue expenditure.
(I am assuming there are no company cars etc)
None accountants find writing down pools very hard to understand, and given the fact that the life of a computer or software license is very hard to predict they tend not to be very useful for the running of the company.
How match of the AIA cost is "real" rather then "delayed"
I can see that AIA reduces the tax take in the first few years it is in use for.
However after a few years, I would have thought it balanced out, as there are no writing down deductions to make when calculating the corporation tax. The capital expenditure would have been all written off in the end, or am I missing something?
AIA
So one of the undeniably good things this government has done in tax is top of the list for removal, and a 25% rate for Tesco is to be paid for by small business. Well, whoopee.
Tescos
Surely if Tescos can retain more of their earnings, to enable futher expansion abroad, to bring further profits to the uk, that is a good thing!
corporation tax
I see no difference to the taxation of the self-employed or Ltd Company. Why should there be??????? Both have to pay Employers Nic. Both have the same expenses.
CA's have been played about with for years. Why not write everything off over a 5 year period on a straight line basis???
Here comes the big one - I don't think the Tories are electable. They just haven't got it. So we won't have to worry about AIA being abolished.
Why not write everything off over a 5 year period on a straight
Because if you are a computer programmer a PC may only have a useful life of a year before it needs replacing. The old PC may then be used for example as “print server”, but a dedicated “print server” can be brought for £50, so the old PC is still in use, but it has a very replacement cost. However if technology does not move on fast for a year or two the PC can have a much longer life, it is impossible to tell at the time it is brought what is useful life is likely to be.
(The resale value of IT kit is very low.) However if you are an accountant the same PC may have a useful life of 3 to 5 years.Software that is needed to carry out work for one client and may be used for other clients over the next few years is also very hard to know how to account for. So we have a capital spend of a few thousand a year that lead to very complex and misleading accounting and tax.
Pity the self employed
Loss of AIA and no compensatory reduction in tax rate.
Partnerships too.
Mark Lee
What about the other changes made at the same time?
Will the WDA rate be put back to 25%? The Integral Features pool scrapped? etc.
These changes no doubt helped to pay for the AIA.
I agree, Mark
Do you think it's because government fails to appreciate that your self-employed freelancer / contractor / jobbing gardener is in business, not a job?
M
Emily Coltman ACA, Support Accountant, FreeAgent Central
first ye need profits
If this government gets voted in again, I rather think the problem will not be corporation tax rates, as even 90% of nothing is still nothing !
The extreme cash flow planning techniques used by this government to fund their excessive spending has left no flexibility.
They have even outsourced debt ! my daughters school has been on a spending spree, new plastic cards with anti bullying messages, new reception area with TV screens, new finger printing technology, etc etc and now find they have a defict of £.75M. Well what a surprise !
Labour voters; teachers, civil servants and the unemployable have never had it so good ! but they have forgotten who has to pay for it all, yes ! the workers: Small business owners, and we are nearly broken !
I need not elaborate on what happens next !
At least the conservatives have some idea of how the multiplier principle works ! Although why big business should benefit more I am not sure about !