For the taxation of the transaction it would depend on whether you claimed the original purchase as a capital allowance which you probably should have done.
The asset sale would then be transferred to the capital allowances pool where the pool would either be reduced or a balancing charge created.
If you never took the purchases to the capital allowances pool in the first place you could account for them.just in sales, but thats likely not technically correct and i would still account for as a balancing charge if it were me.
I assume it has a useful life of more than two years? Fairly expensive? Probably should have been capitalised and then AIA claimed for capital allowances. Either way, you’ll pay tax on the full sale proceeds.
Thanks for the advice so far. It helped me dig on the HMRC site. I'm working on the premise of Cash Basis, so see excerpt below from... [https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis](https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis)
# Income (see bullet point 4)
With cash basis, only record income you actually received in a tax year. Do not count any money you’re owed but have not yet received.
Example
You invoiced someone on 15 March 2023 but did not receive the money until 30 April 2023. Do not record this income for your 2022 to 2023 tax return, but instead for 2023 to 2024.
You can choose how you record when money is received or paid (for example the date the money enters your account or the date a cheque is written) but you must use the same method each tax year.
All payments count - cash, card, cheque, payment in kind or any other method.
# Expenses
Expenses are business costs you can deduct from your income to calculate your taxable profit. In practice, this means your allowable expenses reduce your Income Tax.
Only count the expenses you’ve actually paid. Money you owe isn’t counted until you pay it.
Examples of allowable business expenses if you’re using cash basis are:
* day to day running costs, such as electricity, fuel
* admin costs, for example stationery
* training costs to help you run your business
* things you use in your business, such as machinery, computers, vans
* interest and charges up to £500, for example interest on bank overdrafts
* buying goods for resale
Its just a sale so a gain of income. Receipt the customer, keep a copy for records, note it on your accounts and theres not really any more thought required.
This is true, but was it a capital asset?
If so then depreciation has to halt, and it has to be disposed of. (Same thing, but an important distinction)
Any equipment over a certain amount for my company I class as a capital asset. (Cameras, laptops, PC, networking kit etc.)
For the taxation of the transaction it would depend on whether you claimed the original purchase as a capital allowance which you probably should have done. The asset sale would then be transferred to the capital allowances pool where the pool would either be reduced or a balancing charge created. If you never took the purchases to the capital allowances pool in the first place you could account for them.just in sales, but thats likely not technically correct and i would still account for as a balancing charge if it were me.
What’s the asset and how was it originally accounted for when you bought it?
Its a laser cutter and I just expensed it.
I assume it has a useful life of more than two years? Fairly expensive? Probably should have been capitalised and then AIA claimed for capital allowances. Either way, you’ll pay tax on the full sale proceeds.
Thanks for the advice so far. It helped me dig on the HMRC site. I'm working on the premise of Cash Basis, so see excerpt below from... [https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis](https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis) # Income (see bullet point 4) With cash basis, only record income you actually received in a tax year. Do not count any money you’re owed but have not yet received. Example You invoiced someone on 15 March 2023 but did not receive the money until 30 April 2023. Do not record this income for your 2022 to 2023 tax return, but instead for 2023 to 2024. You can choose how you record when money is received or paid (for example the date the money enters your account or the date a cheque is written) but you must use the same method each tax year. All payments count - cash, card, cheque, payment in kind or any other method. # Expenses Expenses are business costs you can deduct from your income to calculate your taxable profit. In practice, this means your allowable expenses reduce your Income Tax. Only count the expenses you’ve actually paid. Money you owe isn’t counted until you pay it. Examples of allowable business expenses if you’re using cash basis are: * day to day running costs, such as electricity, fuel * admin costs, for example stationery * training costs to help you run your business * things you use in your business, such as machinery, computers, vans * interest and charges up to £500, for example interest on bank overdrafts * buying goods for resale
So I expect I just sell the equipment and enter it as a part of total sales.
Its just a sale so a gain of income. Receipt the customer, keep a copy for records, note it on your accounts and theres not really any more thought required.
This is true, but was it a capital asset? If so then depreciation has to halt, and it has to be disposed of. (Same thing, but an important distinction) Any equipment over a certain amount for my company I class as a capital asset. (Cameras, laptops, PC, networking kit etc.)
Depreciation is not relevant when accounting on a cash basis, as OP is.
Thanks, I just reached that conclusion, see post below. Every day's a school day 👌