untied, fixed assets, capital allowances and depreciation

Last updated 23 December 2019

From time to time you may buy "fixed assets", equipment and machinery that is intended to last a long time.

If you were preparing business accounts, they would appear as an asset. And then each year take a bit of expense known as depreciation to spread this over the life of the asset. It smooths the expenses over several years.

For tax purposes, there is a different way of smoothing the cost, known as capital allowances. Consider it to be tax depreciation.

However, HMRC gives an "annual investment allowance". Anything you spend on fixed assets (with some exceptions) up to the threshold can be expensed for tax purposes in the year you buy it.

The amount has varied over the years. It has been increased to £1m a year from 1 Jan 2019 to 31 Dec 2020, but has been at least £200k since 2012. If you are spending near this level, then it is likely you will have more complex needs than untied is currently able to support.

How to handle this in untied

To record this in untied, simply claim the asset as a business expense. That's it.

(You could optionally spread the tax deductions over several years by claiming "writing down allowances", see under cars and other exceptions)

Cars and other exceptions

There are some exceptions to this:

  • cars
  • items you owned for another reason before you started using them in your business
  • items given to you or your business

In these cases you will need to calculate "writing down allowances" which would need to be entered as a manual expense in untied (the main purchase would be ignored).

Selling a fixed asset

Assuming you'd taken the full annual investment allowance, then when you sell a fixed asset, what you get for it should just appear as business / trading income in untied.

What untied doesn't support

untied does not support fixed asset registers (you'll need to manage this separately so you have a list of what you own). Remember as well that untied is intended for individuals turning over under £85k.

What's a capital gain?

You probably want to be here.

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