Selling on taxed DJ gear.

[Tom]

Not to sure where I stand with this.


I have some dj gear to sell but this has been taxed already.

If I sell equipment, do I have to keep a cut away for tax like as if I was selling my dj service???


Help would be great as I have some stuff that really needs to go. :)

[spin mobile disco]

Selling of equipment that went through your books would mean that any capital raised would have to be put through your books as capital gains. i.e profit made from sale of capital.

[Tom]

Ahh, ok. Thought it was something like that but wasn't 100%.


Thanks. :)

[Penfold42]

Does that include things that break down and are no longer usable?

*Edit - I've just put cheque in post Tom..:o ..been really busy..:o *

[Vectis]

Presumably when you bought the gear it went onto your books as a fixed asset. Since then it will have shown depreciation (claimed as expenses) and have a current nett book value (NBV). The difference between the NBV and the sale price, if positive, is taxable. If negative, it goes onto your tax return as a loss, therefore reduction in your taxable income.

So for example, you pay £100 for a light. At the end of the tax year you claim depreciation of £25 so it now has an NBV of £75. You then sell it for £50. You report the 'loss' of £25 and this reduces your tax liability for next year. Or, if you sell it for £100, the £25 'profit' is increases your tax liability and you therefore pay tax on the 'profit'.


Does that include things that break down and are no longer usable?

*Edit - I've just put cheque in post Tom..:o ..been really busy..:o *

In this case treat the item as disposed and claim the whole NBV for that item at year end as a loss. It disappears from your asset register and your overall tax liabilty is reduced as a result. Just be careful that you DO dispose of it. If you sell it, even as spares or repair, this should be deducted from the write-off amount.

[Penfold42]

So what if it goes on the blink and it's not worth fixing it because too fix it is more than it's worth?

I've just seen your reply.....:)

[Vectis]

So what if it goes on the blink and it's not worth fixing it because too fix it is more than it's worth?

I've just seen your reply.....:)

It's good practice to try to get something for it so even if you ebay it for a fiver you can show you've gone to reasonable lengths to protect your assets value.

[Tom]

It's good practice to try to get something for it so even if you ebay it for a fiver you can show you've gone to reasonable lengths to protect your assets value.

Ahh. In my case I will be makig a loss on everything I sell because there is no way I could get full price for second hand equipment, even if it's in mint condition.


So just to clear it up, If I sell my equipment for a loss (not intentional), I won't have to pay tax on it???

[Vectis]

Ahh. In my case I will be makig a loss on everything I sell because there is no way I could get full price for second hand equipment, even if it's in mint condition.


So just to clear it up, If I sell my equipment for a loss (not intentional), I won't have to pay tax on it???

It might help to post a history of the item in question from purchase through to disposal, and what's been claimed already.

If you've bought and sold it in the same tax year, then it's probably best not to list the item as a fixed asset but simply enter the loss as an expense.

[Tom]

Ahh, ok. Thanks for that Martin. :)

[Andy Westcott]

Ahh. In my case I will be makig a loss on everything I sell because there is no way I could get full price for second hand equipment, even if it's in mint condition.


To put what has already been said in another way:

You aren't looking to get the 'full price' for your old gear; The gear is only valued at its original purchase price minus the 25% per year depreciation which the tax man so kindly allows you.

So - if you bought said light for £100, the tax man would allow you to put down £25 in the first year as an expense (not the full £100 - be careful of that), leaving the light with a value of £75.(It's now second hand, and a year old, see?) In the second year, you are allowed a further 25% of its value, so the second year you put £18.75 down as an expense. (25% of £75.)

Now - if you are able to then sell the light for more than £56.25, you've made more than the value the tax man effectively let you have back in recognition of its used status, so you must show the difference as a profit.

Any wiser?? :)

[Tom]

Thanks for that, Andy. I kind of get what you have said but I'm rather tired at the moment so will give it another read in the morning. lol. :)

[Danno13]

Actually.. just to throw a spanner in the works, they've introduced something called annual investment allowance for next year, for all assets up to £50,000 (some things are excluded though, vehicles are one of them). So you can claim the full value in the first year, instead of depricating it as normal.

http://www.bytestart.co.uk/content/taxlegal/9_6/annual-investment-allowance-proposal.shtml

So basically if you buy anything this year, you'd write off the full value against tax, and then regardless of what you sell it for next year, you'll have to declare it as profit.

[Andy Westcott]

I'll have to read the link, but I'm assuming this is optional?

If not, the lower earners are going to be considerably out of pocket. :(