Depreciation

Is this tax deductible?

Didn't find your answer?

I am confused.

Should I allow depreciation for tax purposes?

Thanks for your help.

Replies (38)

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By cheekychappy
07th Sep 2016 16:14

Yes, of course.

This is a well known tax loophole. It is fuelled by businesses being able to set their own depreciation policy.

My depreciation policy is to depreciate everything at a rate of 500%. I even capitalise the paperclips as it is so worthwhile to do so.

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Replying to cheekychappy:
By JCresswellTax
07th Sep 2016 16:24

thanks for your input.

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Red Kite
By Red Kite
07th Sep 2016 16:16

Is this an exam question?
There are many threads on here, particularly since 3rd May 2016, which may, or may not, provide you with the answer.
Next, you'll be asking for suggestions for the evening meal.

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Replying to Red Kite:
By JCresswellTax
07th Sep 2016 16:25

No exam question, I have my own clients and need to know the answer to this.

Can you please just confirm you agree with cheeky? I can't be bothered to research it. Thanks.

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Replying to JCresswellTax:
Red Kite
By Red Kite
07th Sep 2016 16:32

I have to disagree with my learned friend. I would suggest that, instead of depreciating the asset in question, one simply charges the cost of the acquisition to the trading and profit and loss account.
Assuming that this is a sole trader, I'd simply add a pointer, to the claim, within the white space of the client's tax return.
These days, I simply can't be arsed with all these journal niceties. They really are old hat.

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Replying to Red Kite:
By JCresswellTax
07th Sep 2016 16:35

Thank you, I shall make this my policy moving forward.

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Replying to Red Kite:
RLI
By lionofludesch
08th Sep 2016 09:15

Red Kite wrote:

I have to disagree with my learned friend. I would suggest that, instead of depreciating the asset in question, one simply charges the cost of the acquisition to the trading and profit and loss account.

Ah - HMRC's new, favoured "cash basis".

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By craig preece
07th Sep 2016 16:36

Yes, but if there are no assets to calculate depreciation on you should use £8,060 instead.

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By JCresswellTax
07th Sep 2016 16:40

Thanks, can I claim the VAT back on the £8,060?

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By Chipette
07th Sep 2016 16:42

I have no idea but next time you have to post such a difficult question please use the "Anonymous" function.

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By MM Bookkeeping Services
07th Sep 2016 16:44

May as well!
Claim back the Vat.

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Replying to Chipette:
By JCresswellTax
08th Sep 2016 09:08

Oh damn I thought that was only for use when posting daft questions!

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By Accountant A
07th Sep 2016 16:42

Could you give more details of the assets in question. What method of depreciation are you using? What colour are the assets?

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Replying to Accountant A:
By JCresswellTax
08th Sep 2016 09:09

More detail:

The asset is a 50 inch tv that my client has got customised to be orange and blue.

He says he uses it solely for looking at accountingweb.

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Red Kite
By Red Kite
07th Sep 2016 16:49

I've even stopped making adjustments for those disallowable expenses. You know, where you're supposed to add-back (another so old hat phrase, don't you think) all those non-business items.
In fact, if I'm really in the mood, I'll visit the National Lottery website and, once I've bought a lucky dip, I often enter the numbers on the next tax return that I do. Works for me, time and time again.
Crikey, cripes; hot off the press, an edit option, now appears alongside!

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By JCresswellTax
07th Sep 2016 16:52

I don't think many of you are taking my question seriously :(

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Routemaster image
By tom123
07th Sep 2016 16:54

Everything is allowable now on a cash basis, I thought, just scan it in...

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Routemaster image
By tom123
07th Sep 2016 16:54

Everything is allowable now on a cash basis, I thought, just scan it in...

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By brian-scholar
07th Sep 2016 17:06

Hold on a minute, won't MTD change everything?

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By In a Daze
07th Sep 2016 19:25

Is this a joke?

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Replying to In a Daze:
By JCresswellTax
08th Sep 2016 09:11

I would appreciate it if you weren't so cheeky.

I am trying to increase my knowledge for my client's benefit. I never knew that was a crime!

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paddle steamer
By DJKL
07th Sep 2016 20:58

No, it is surely the new A Web, Making Tax Digital, advisory thread, the one stop shop for all who really do not see the point in accountants.

One thread holding answers to all questions will save a lot of time later, regular posters will be saved from having to bother insulting anonymous posts, accounting productivity in the UK thereafter being vastly increased.

Maybe A Web can write an App for MTD which directs all such enquiries to this permanent,and of course constantly trending, information resource.

Depreciation- something to do with disapproval and helping to ward of a disaster, originally only done by saps.

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By User deleted
07th Sep 2016 21:05

Just to clarify, is this for council tax?

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Replying to User deleted:
By JCresswellTax
08th Sep 2016 09:12

No of course note, I do not advise on that!

It is for corporate action tax.

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Red Kite
By Red Kite
08th Sep 2016 09:15

Like the tag. Who'd have thought water cooler?

Still on the lookout for the new "like" icon. For some reason John's gone all " (*)Aweb" on that one.

* Aweb- is akin to the mushroom diet - kept in the dark and fed on [***].

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Replying to Red Kite:
By JCresswellTax
08th Sep 2016 09:27

Why is there even a tag for water cooler? Hilarious!

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Replying to JCresswellTax:
By Tim Vane
08th Sep 2016 10:05

JCresswellTax wrote:

Why is there even a tag for water cooler?

It dates back to the old Capital Allowances regime when there were special rates for Industrial Buildings, Agricultural Buildings and Water Coolers. Water Coolers had their own asset pool which attracted enhanced WDA of up to 173% depending on the temperature of the water and the number of times the bottles were replaced.

The allowance was abolished years ago since it was subject to abuse by companies who were installing them all over the place and using them to reduce profits disproportionately to their use. That's why there were so many of them. Nowadays the tax advantage is gone and the water cooler has largely gone the way of the company car. They are often replaced by vending machines. Or taps.

Back in the old days of aweb there were a lot of questions on any answers about the calculation of WDA on water coolers, but back then nobody ever used tags so you'll not be able to find anything now.

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Replying to Tim Vane:
paddle steamer
By DJKL
08th Sep 2016 10:19

I think that a water cooler having its own pool really goes without saying.

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Replying to Tim Vane:
By JCresswellTax
09th Sep 2016 10:07

Not sure if serious!

And if you are, I am very impressed with accountingweb having the knowledge to put in a section for this! (even if it is very much out of date!).

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By justsotax
08th Sep 2016 09:36

its 'advice' not 'advise' FFS...oh...is it...hmmm..not sure now...what was the question?

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Replying to justsotax:
Red Kite
By Red Kite
08th Sep 2016 11:24

One asks for advice and,
one is then advised.

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By sosleepy
08th Sep 2016 10:48

You got it backwards. You should be doing depreciation on your tax.
The idea is to have loads of corparashun tax then you do depreciation on it and then you pay less incum tax. The best bit is you don't have to pay the corparashun tax because my friend's friend said so.

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PJ
By paulgrca.net
08th Sep 2016 12:53

Do remember to make an R & D claim for the time spent on AW finding the answer.

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By nick farrow
08th Sep 2016 15:07

Is depreciation still allowed in respect of the charge on assets acquired under finance lease - see here
https://www.accountingweb.co.uk/any-answers/uk-tax-treatment-of-finance-...

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Replying to nick farrow:
By JCresswellTax
09th Sep 2016 10:08

Eh excuse me Nick.

I would appreciate it if you didn't hijack my thread!

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By Democratus
09th Sep 2016 10:34

What if i have an asset offshore which i do not want HMRC to know about. Can I claim WDA and depreciate it? I know the standard depreciation is £8,060 but i want to account for it in dollars, what is the correct double entry?

Please help,,,,,,

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By Ruddles
09th Sep 2016 11:09

Of course it's allowable. But taxable on the director as a benefit in kind. But only to the extent that it exceeds the dividend 0% band.

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