Writing off new asset against tax?

riveratom

Hi folks,

Let's say you are a sole trader and in 2022 you buy a new asset that is generating revenue. In 2023 you file your tax return and report on the revenue and profit from the asset, along with any other income of course. My question is: can you write off a portion of the asset cost against tax in 2023?

Example: say the assets costs 100k and your tax liability in 2023 is 40k. Can you reduce that 40k in any way using the asset you purchased in 2022?

SureYWouldntYa

You'll get capital allowances over 8 years for the asset, at a rate of 12.5% of the cost of the asset. At a cost of €100k, that's a capital allowance of €12.5k every year.

The allowance is offset against your profits, not against your tax. So if your case I profits are €100k, your capital allowances will bring it down to €87.5k.

ThreeGreens

The above is correct for plant and machinery. (Office furniture, machinery, computers etc).

However for other assets the position differs.

For example for motor vehicles, the write off is related to its efficiency.

For buildings you don't get a tax deduction at all (except in some limited circumstances).

There are other rules for IP etc.

riveratom

https://www.boards.ie/discussion/comment/119505157#Comment_119505157

Thanks both, what would the position be for a digital asset does anyone know?

marieholmfan

Almost certainly non depreciable. You should speak to an accountant.