FreeAgent Update: Release Red Leicester
Undo Last Upload
You now have the ability to undo the last statement upload you did - useful if you accidentally uploaded into the wrong account.
When you select Undo Last Upload from the statement screen of a bank account, you can view the transactions you will be deleting before you confirm that you want to proceed. Any explanations you added to those transactions will also be removed.
Sole Trader Profit and Loss
Previously only Limited Companies could view a Profit and Loss account (just a summary of money in and out for the year). This has now been extended to all you Sole Traders out there. Visit Home > Profit and Loss for the good news.
Depreciation and Capital Allowances
If you buy something big during the year, which will get used over more than one year, you can't just claim it as an expense. You have to treat is as what is called a Capital Asset, sometimes called a Fixed Asset. This will apply to things like computers and office furniture which you buy for your business.
Instead of it reducing your taxable profit as an expense would, you can account for the depreciation of that thing and reduce your tax using Capital Allowances instead.
We use what's called 'Reducing Balance Depreciation' (read a slightly technical article from Wikipedia here) which, to keep things simple, uses the same percentages as the HMRC's Capital Allowances schemes: a 50% allowance in the first year and then 25% on the remaining balance in subsequent years.
Fixed Assets are created as Explanations of Bank Transactions, or Manual Bank Entries, of type Purchase of Fixed Asset. If you need to add Fixed Assets which existed prior to you starting to use FreeAgent, just add them as Manual Bank Entries on the appropriate date when you bought that asset.
Any Computer Hardware or Office Furniture expenses you already had in FreeAgent will have been automatically converted into Fixed Assets. You can see this list on the Profit and Loss screen, where the depreciation and Capital Allowances calculation is also shown.
Capital Allowances are now also figured into the calculations of Corporation Tax, and next week they will also be used to reduce the taxable profit on Self Employment Income Tax too.
- How MTD will work for businesses with an accounting year that doesn't match the tax year
- Important news for contractors - changes to IR35
- New tax year: what has changed?
- New VAT flat rate scheme rate for certain businesses
- Why the first week of April is the best time to switch to a new accounting system