12 Days of Tax Tips – Day 9

Did you buy anything big for your business?

male hands typing on a laptop

If you are self-employed and your profit is less than the personal allowance (£9440 in 2013/14) and you have capital spend, don’t use your Annual Investment Allowance as this will be a waste given you will not be liable to pay any tax. (You may be liable for class 4 National Insurance, but that’s another story). Carry forward the value and write off in instalments in future years when you have tax to pay.

Most often this happens in your first full year of business when you are probably having to buy computer equipment & other tools of business.

You can only claim AIA in the period you bought the item.

The date you bought it is:

  • when you signed the contract, if payment is due within less than 4 months
  • when payment’s due, if it’s due more than 4 months later

If you buy something under a hire purchase contract you can claim for the payments you haven’t made yet when you start using the item. You can’t claim on the interest payments.

You cannot claim the Annual investment allowance for the following items:

  • Cars (the exception here are dual control cars for driving instructors);
  • Items you owned before you started to use them in the business;
  • Items given to your business for example that shiny new iPad Santa gave you.
  • If you are a sole trader and you use part of the item outside the business, hen you have to apportion down the amount claimed by the proportion of personal use.


Always talk to your accountant before acting on any advice. If you’d like to talk to us about your accounting requirements, please complete the contact form >>>> HERE <<<< and we’ll get in touch.








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