Question archive: capital allowances
Can I claim tax relief on equipment essential for my employment?
The Inland Revenue's Help Sheet IR206 (available on their website www.inlandrevenue.gov.uk) explains all about capital allowances for employees.
Briefly, you can claim Capital Allowances on the cost of equipment which you provide to carry out the duties of your employment. Expenditure on 'high-tech' equipment (such as computers) currently qualifies for 100% allowances.
You must exercise caution. If you are a PAYE taxpayer then you must be able to demonstrate that the computer is a necessity. You may consider it is but this test is notoriously difficulty to pass. If other employees in a similar position manage without a PC then is it really necessary? There are lots of tax cases which support the Revenue. This is the way the Revenue thinks. To be safe you could ensure you make it clear to the taxman in the blank additional information box provided on the SA return the reasons why you need the PC. If they do not query it within 12 months of the filing date then they will be not be able to argue with that return in the future as long as you have not misled them.
Both items are treated as capital purchases, which means you cannot set the costs against your taxable income. However, you may be able to claim what is known as a capital allowance against your income. Both assets must be used wholly and exclusively in the pursuit of your trade/profession for capital allowances to be allowable. You will need to make an adjustment for any private usage element.
The following year you would use the net written down value to make the same calculations.
The Inland Revenue Capital Allowances manual reference CA2397 instructs Inspectors that "you may get a capital allowance claim on a Hackney carriage (taxi) licence plate either on it's own or, more usually, as part of the cost of the taxicab to which it is attached. The cost or value of the taxi licence plate represents both the actual licence plate itself, which is plant, and the right to trade, which is not. It is only the part of the cost that is attributable to the actual licence plate that qualifies for capital allowances as expenditure on the provision of machinery or plant. This will be a nominal amount."
This page was last reviewed on 07 April 2005. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
