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waqqas memon,
Category: Tax
Satisfied Customers: 21
Experience:  Senior Manager at MMBA Accountants
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How does a depreciation expense make its way back into a

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How does a depreciation expense make its way back into a businesses profit and loss listing?
Say I have a £1000 laptop that depreciates in a straight line over 4 years, does the first years depreciation of £250 end up as an expense in my outgoings?

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Customer: replied 5 months ago.
I can continue to wait

Hi, my name is ***** ***** I will be answering your question. Yes, £250 will be shown as an expense in your profit and loss account. Please note that the depreciation will be disallowed within the tax computation and be replaced by capital allowances.


Customer: replied 5 months ago.
Thanks Waqqas, so in the UK tax return sa103s form the £250 would go in box 25 as other capital allowances, or does it it go towards my Annual Investment Allowance in box 23?

Hi, your capital allowances or Annual Investment Allowance calculation is separate and depreciation is not shown as it is a disallowed expense.

Customer: replied 5 months ago.
I see so the depreciation doesn't effect my tax return in any way?

No none of the disallowed expenses should form part of the tax return.

Customer: replied 5 months ago.
Thank you. So depreciation doesn’t of set your tax in anyway? Might I ask what the point of it is in that case?
Customer: replied 5 months ago.
Is it more for if you dispose of the asset in the future?

For tax purposes - depreciation does not have an impact since HMRC has replaced it with capital allowances. Depreciation is a pure accounting concept. A 5-star rating will be appreciated.

waqqas memon,
Category: Tax
Satisfied Customers: 21
Experience: Senior Manager at MMBA Accountants
waqqas memon and other Tax Specialists are ready to help you

Thank you very much.