Article by Drew Coles member of the Chartered Institute of Management Accountants
All capital expenditure purchased for use in the business should be listed as a capital expense for tax purposes and kept on an asset register. Capital expenditure will include company cars, vans, computers and even company websites. This is ultimately because capital allowances can be allocated to this expenditure and you must keep track of any allowances used against each asset come self-assessment time.
As above capital allowances can be claimed on capital expenditure purchased for business use such as company cars/vans, computers, websites etc. Sole traders are allowed to claim for annual investment allowances (AIA) and writing down allowances (WDA).
We have had previous cases with clients that thought the Mileage allowance was the way to go only for us to calculate savings of over £2000 in tax liability when using the full cost method and capital allowances above. This can work both ways depending on your business circumstances.
If the mileage method is used you must keep a good record of your miles travelled for business and it is advisable to log the date, destination, work carried out and miles. This is easy to do on an Excel spreadsheet.
As well as the capital asset list and capital allowances taken expressed above you need to keep all information and records in relation to business activities. These include bank statements, receipts, sales and purchase invoices.
Please see below the deadlines HMRC have in place for registering and submitting your self-assessment tax returns.
Register for Self Assessment if you’re self-employed or a sole trader, not self-employed, or registering a partner or partnership
by the 5 October 2018
Paper tax returns - Midnight 31 October 2018
Online tax returns - Midnight 31 January 2019
Pay the tax you owe - Midnight 31 January 2019