Tier 1 extension net profits for self employed

[vinividivici]

Does the net profits has to be after deducting Annual Investment Allowance

[AccountantMatthew]

You're getting accounting and taxable profits mixed up there vinividivici.

Capital allowances do not come into equation regarding putting together a set of accounts, only when working out your Schedule D income.

[vinividivici]

You're getting accounting and taxable profits mixed up there vinividivici.

Capital allowances do not come into equation regarding putting together a set of accounts, only when working out your Schedule D income.

Hello, thanks for the reply

Actually i applied for t1 based on my net profit of £2620 from dec 2011- feb 2011. the accountant provided my net profits upto feb 2011. after that i bought a netbook of £147 for business in 2nd march 2011 and now planning to include it in Self Assessment.

can you tell me where to put that £147 pounds in - is it in expenses as well as AIA or just AIA ?

[AccountantMatthew]

AIA is a capital allowance available on qualifying assets so the purchase is an asset rather than an expense.

The other thing to consider though is whether it should be claimed this tax year - it depends whether you are redrawing your accounts with a period ending 5 April 2011, whether your business was started a while ago and you are into your second year of trading or beyond or if you have a short period ending in February and are therefore having to include overlap profits in your accounts.

If in any doubt, I'd always recommend talking to your accountant (although I accept that you may think that I would say that!) - it's best to spend a few pounds now and get it right rather than get things wrong and potentially end up spending more in time and money later.