We were advised to buy a bunch of equipment which we need for the business before the Tax year End, but when I check the anticipated tax bill on Quickfile, none of these purchases seem to have shown up as costs which reduce the profit/tax bill due…
So now I’ve just bought a bunch of equipment and still have a the same tax bill cost… I dont see the benefit?
Why do none of the expenses we incurred to purchase the equipment we need reduce the profit figure?
PS We will be VAT registered from next month. (Flat rate). Is ther anything I need to do differently with Quickfile.
Capital expenditure would normally go on the Balance Sheet not the P&L. It depends how you’ve recorded the purchases. If you’ve posted to any nominal code between 0-2999 this would feature on the balance sheet, any code from 5000-9999 would feature on the P&L. If you post to the P&L it will reduce the profit margin, otherwise it would show as an asset on the balance sheet.
If you want to reallocate your purchases you can modify the purchase and change the category or journal the balance from the Balance Sheet to the P&L. It is however worth seeking advice from your accountant on this, if you buy equipment it wouldn’t necessarily reduce your tax bill.
I hope you don’t mind me asking but did you resolve this…as I have a similar issue with some equipment showing up in my balance sheet as Plant, Machinery as Assets and not in my P&L…interested to hear how you got around it.
@WayneJohns, Plant and Machinery is an asset code so would be classed as capital expenditure. Whenever you post to a code within the range of 1-2999 it will feature on the balance sheet. 4000-9999 would go on the P&L.
When you purchase something for your company you have to either post it as capital expenditure (1-2999) or as a purchase or expensed item (5000-9999). The latter would reduce your taxable profits however any capital expenditure would increase your assets and would typically depreciate over time offsetting against future profits.
