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Buying pinball machines as business

Rob zombie

Rob zombie

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Just wondering out loud, if you're a LTD company, VAT registered and in the same line of business that would allow you to buy a pinball machine and write it off as a business expense/acquisition...would you also be able to depreciate it like standard computer equipment at 40%?
 
yes although the depr rate debatable. usually over working life. a pinball arguably lasts longer than a typical laptop. if i was doing it as a business id go for 33% straight line depr over 3 years. a straight laced accountant might go for 20% of NBV.

plus all your maintenance costs are straight off the p&l.
 
AlanJ said:
yes although the depr rate debatable. usually over working life. a pinball arguably lasts longer than a typical laptop. if i was doing it as a business id go for 33% straight line depr over 3 years. a straight laced accountant might go for 20% of NBV.

plus all your maintenance costs are straight off the p&l.
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Just wondering how they would argue it? I've written off all my hardware costs this year at 40% as recommended. The computer equipment easily matches that I'm sure. Some of the other stuff I couldn't even sell if I wanted to without a license. So I'm curious how they would go about verifying the depreciation?
 
I never mess with the taxman. They have more power than the police.

so you save 20% but when you come to sell. Or if you need to show how your business performs to get a mortgage or something and you write off assets in two years... hmm.

Neil.
 
Neil McRae said:
I never mess with the taxman. They have more power than the police.

so you save 20% but when you come to sell. Or if you need to show how your business performs to get a mortgage or something and you write off assets in two years... hmm.

Neil.
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Yes they are only answerable to the queen. They throw people down flights of stairs and shoot them on the hard shoulder of the motorway. I have no delusions. Just wondering realistically how much money you can write off in the annual accounts.
 
it really doesn’t matter how much you write off each year

eg buy a 10k pin in year 1 and sell for 4k in year 4. total loss £6k

with no depreciation you only get a tax benefit of the 6k loss in year 4


with 2.5k depreciation a year your save tax on 2.5k in each of years 1, 2 and 3. then in year 4 you’d have a gain of 1.5k. (asset sold for 4k against a book value of 2.5k). so total tax benefit still £6k.

all depreciation does is deliver the eventual tax saving over the life of the asset.
 
i should have added that it only needs to be reasonable at the outset for the taxman to accept it. nobody knows in advance how long an asset will be used for
 
Depreciation is generally not an allowable deduction against profits.
Capital allowances are what are allowable and have their own rules.
 
AlanJ said:
i should have added that it only needs to be reasonable at the outset for the taxman to accept it. nobody knows in advance how long an asset will be used for
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Yeah that's what I figured, and in most reasonable cases 40% is normal. e.g. a keyboard or speakers are going to be worth 40% of the asking price as soon as you open the box
 
yeah but thats not the case of a pinball machine.

but hey dodge the tax and then complain about government supplied services shortly after!

Neil.
 
Neil McRae said:
yeah but thats not the case of a pinball machine.

but hey dodge the tax and then complain about government supplied services shortly after!

Neil.
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I've no intention of dodging the taxman....or of buying a pinball machine. It's more of a hypothetical question as to how you deal with tangible assets that buck the norm by appreciating rather than depreciating.
 
So let's say you owned an arcade full of pinball machines, you would only pay capital gains tax on selling those machines. But am I right in thinking that every year when you do your accounts you would need to add the amount of appreciation to the company assets and pay corporation tax on that as well?
 
you can revalue an asset at any time in your accounts but you only pay cgt once the profit is realised, ie you sell the asset.
 
the unrealised profit is held in a revaluation reserve account. companies do it every so often with commonly appreciating assets such as buildings and land, stock market shares etc.

If you were holding pins in a company. you’d just depreciate, no point in revaluing unless you were trying to raise a loan against assets.
 
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