Laptop bought before company started but used for business use - Can I claim capital allowances?

[Richard_Pitts]

Hi,

I purchased a laptop a year before starting my company, and I use it probably 75% of the time for business use. Can I claim any capital allowances for this laptop?

I’m a sole trader using the cash basis accounting method.

Many thanks,
Richard

[Fauxman24]

Here’s a copy of gov.uk website

Office, property and equipment

Claim items you’d normally use for less than 2 years as allowable expenses, for example:

• stationery
• rent, rates, power and insurance costs

For equipment you keep to use in your business, for example computers or printers, claim:

• allowable expenses if you use cash basis accounting
• capital allowances if you use traditional accounting

[cbstephensaca]

So you say company, but then you mention you’re a sole trader. Which is it? If you purchased the laptop for business, as a sole trader, then under the cash basis, you can claim for the cost of the laptop (less the 25% personal use) in the tax year you bought it. This is not capital allowances - they are available as a form of tax relief if you are using the accruals method of accounting. You just put it through as an allowable expense, not a capital item.

If you bought it before you started trading, then you cannot claim the expense, as you cannot claim for items you already own but which you have brought into use in the business. You can claim for the business proportion of a replacement laptop if you were to buy a new one.

If you have gone from sole trader to a company (i.e. incorporated) then the rules are diffferent.