Diploma in Professional Accounting
Diploma for Financial Advisers
Member of London Institute of Banking and Finance
Sometimes, you buy larger items for your business that you’ll use for a long time, like equipment or vehicles. These are called ‘capital assets’. Instead of claiming the full cost as an allowable expense in one go, you claim ‘capital allowances’ over several years. This spreads the tax relief over the item’s useful life.
Common items you can claim capital allowances on include:
•Equipment: Computers, tools, machinery.
•Business vehicles: Cars, vans, lorries, bicycles used for business.
If you use ‘cash basis accounting’ (a simpler way of recording income and expenses), you can claim capital allowances on cars you buy for your business. For most other items you buy and keep for your business, you claim them as allowable expenses in the usual way.
References
[1] GOV.UK. Expenses if you’re self-employed: Overview. Available at:
https://www.gov.uk/expenses-if-youre-self-employed
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