How to record the purchase of a capital asset after the FreeAgent start date

This article explains how to record the purchase of a capital asset that your business buys after its FreeAgent start date.

The asset will be handled differently if you bought it before your FreeAgent start date but after your company start date, or if you personally bought the asset before the company start date.

Navigate to ‘Banking’ at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.

Choose the relevant bank account from the list.

When you explain or manually enter the transaction, record the capital asset as one of the asset purchase types and enter what the asset's useful life will be. If you’d like to add new 'capital asset types', follow the steps in this article.

For capital assets, it's important to include a detailed description of the asset, and, if you can, to upload a scanned image of the receipt or bill showing the purchase of the asset. Capital assets are tax-sensitive and your accountant, or a tax inspector, may need to see further information.

It's also important to make sure you reclaim the right amount of VAT on your new asset. If you are on the VAT Flat Rate Scheme and you are able to reclaim VAT on this asset under the scheme's rules, set the VAT rate to 'Auto' and FreeAgent will include the reclaim on your VAT return. Please note that in most cases you won't be able to reclaim VAT when you buy a car.

Categorising different transactions as capital assets

Categorise the transaction using one of the asset purchase categories, which are at the bottom of the category list, when you enter a bill or expense.

If you're explaining a bank payment or entering the bank transaction manually you need to choose 'Purchase of Capital Asset' for the transaction type, under the 'Money Out' list and then choose one of the asset types.

Choose the asset's life from the drop-down menu.

Enter a detailed description of the asset. This is to help your accountant or an HMRC inspector, as assets are a tax-sensitive area.

You can upload a scanned image of the receipt by choosing 'Select a file' from the 'File to attach' area. If you have a receipt, invoice or bill, saved as an image file (PNG or JPEG) or PDF on your mobile device or as an email attachment, you can import it into your 'Files' area using the FreeAgent mobile app. To upload an imported file, select 'Choose from saved files' instead and follow the instructions. Please note that you won't be able to use the FreeAgent mobile app if you have an unincorporated landlord account.

Viewing the asset in your books

Navigate to the 'Accounting' tab at the top of the screen and select 'Reports' from the drop-down menu.

Select 'Capital Assets' from the 'Breakdown' section.

You'll see that FreeAgent has entered in the asset's cost and has started to calculate its depreciation.

So that's all you need to do to make it do that. Just explain the bill, bank payment or out-of-pocket expense, as one of the different types of capital asset, and choose the asset life span. FreeAgent will do the rest.