Claiming back the cost of tools?

[Razzmond]

Hello all,

I keep hearing different people with different opinions on this so thought this would be a good place to ask.

Its time for the old self assessment now (my first one) and I keep hearing people saying that you can claim back the cost of your tools "because you need them to do your job".

On the other side, I hear people saying "You can only claim back the VAT you spent on the tools, not their whole value".

Everyone I have spoken to is self employed and has been for a number of years and claims to have done it either one of these two ways.

Is anyone able to clear this up for me so I can finally have some clarity?

Thanks in advance

 

[Richard Burns]

The purchase of tools for the job you are doing will either classify as expenses if they are short lived tools or as capital expenditure if they are large long lived tools.
If you are registered for VAT then you will be able to offset the VAT against your incoming VAT.
If you are not registered for VAT then the total cost is considered as expenses or capital as appropriate.

You are probably best investigating the situation on the HMRC website.

 

[Octopus]

If you are SE, tools are a business expense.

As its your first year, you have until the Autumn to submit your claim so maybe a visit to a local accountant would make sense?

 

[telectrix]

can submit SA up to jan 31st 2015 if you do it on line.

 

[Razzmond]

I'm registered to do it online.

Think a quick trip down the old accountants is in order! Did a business diploma at college which included accountancy so naively thought I'd remember enough to keep my own books.

Guess not!

 

[telectrix]

try a programme called quickfile. download for free. does all your invoicing, expenses etc. easy and quick to use.

 

[jaypp]

A good accountant will probably be useful as it's their job, also one less thing to worry about. You find people will say 'just claim it back' re tools etc., but it is in effect when self employed, just the VAT you are getting as the cost is taken from gross income, then your allowance and then taxed on that figure @ about 20%.
The taxman doesn't take the cost of tools, fuel etc. from the amount of tax you owe as some (myself included before) might interpret it.
If Ltd, I would say you will need some advice. As said, an accountant will know what will work best for your particular situation.

 

[Razzmond]

Incidentally, after posting I did find quickfile on a google search but not sure what to make of some of the reviews. Do you use it yourself telectrix?

Im not a ltd company, (Im just doing subbie sparkies mate work to fill in blanks my initial training left me with, with a really good company who, thankfully, seem to not mind when I dont know certain things and dont mind showing me) but due to my self employment I'm thinking I need to start getting serious on the paperwork side of things.

Due to the fact I dont take a large sum of money home, I'm not sure if hiring an accountant is the best thing for my situation. Obviously I will definately need one if the day comes where I do any of my own work.

So, just so I get this right, I claim back the VAT (20%) I have paid for my equipment but not the entire cost?

Thanks all

 

[Deleted member 26818]

No, you claim the whole amount.

Not sure where this thing about VAT comes from, but it would only alter things if you were registered for VAT.

If you were registered for VAT, then you would claim the VAT portion from the VAT man, and what ever is left would be an expense which you would then list as a business expense.

Remember you will not be getting back the total cost of an expense, just what ever tax you would have paid on the amount.

Something costs £100, you save £20 on your tax bill.

 

[Octopus]

I wouldn't bother going VAT registered until your turn over reaches over £75K

 

[Paul.M]

Incidentally, after posting I did find quickfile on a google search but not sure what to make of some of the reviews. Do you use it yourself telectrix?

I've been using Quickfile for about two years now without any problems. Very easy to use, if you can use a forum you can use that. Private customers and client accountants alike love it, very easy and clear to read. One thing I love about it is that once you have e-mailed your invoice, once the customer/client looks at it the time and date is logged on each invoice and you can see that they have viewed your bill. No excuse of "we have not received your e-mail".

In all the time I've used it I have not received 1 advert, e-mail offering goods and services or trying to get me to buy anything. It will cost you to print and post your invoices but it is th same price as a first class stamp! They do offer their services as accountants to do your end of year. All in all a very good and FREE accounting program. Sign up to it and practice on your friends, send them some crazy made up invoices and have a go with it. Just a word of warning, set up your own info perfectly. It is difficult to change afterwards.

 

[Razzmond]

Sounds perfect for me! Thanks Paul, I will definitely crack on with that. That's what I love about these forums. Excellent advice from those with experience. Thanks to you all for your help!

 

[Paul.M]

Tel said it first, were is his "thanks" lol.

It is a good program for people like yourself, it will make your paperwork life much easier trust me.

 

[Razzmond]

Cheers Tel! (My bad!) Yeah its good to get a review on its suitability from people who do this kind of work.

One half of people saying "Get an accountant", the other half saying "Dont bother" and me thinking "Whats an overhead?" lol!

Its gutting really considering I trained in accountancy and genuinely cant remmeber any of it, save for some analogy about a guy who owns an ice cream van!

 

[sparkdog]

I don't get complicated about it.If its a lot of money I do capital expenditure,if its not much then materials/stock or misc expenses.