How do you enter an expense as a capital allowance with a split between business and personal use?

Hey there, kimjones3.

Thanks for turning to the Community about tracking your expenses. I’m here to clarify about entering and splitting transactions in QuickBooks Self-Employed.

The application is used to support self-employed individuals in tracking business-related transactions. Expenses manually entered are automatically tracked as "business".

I suggest connecting your bank to QBSE, so you can categorise transactions. Let me guide you through the steps.

To link the bank:

1. Go to the Gear icon at the top.
2. Click on the drop-down, then sect Bank Accounts.
3. Enter the name or the URL of your bank in the search field.
4. Enter the login information you use for your bank, then choose Connect securely.

If you’re using the mobile app, you can follow the steps in this article on how to link your account to QBSE. Please proceed directly to the If you're using QuickBooks Self-Employed app for mobile section.

Once done, you can now start downloading transactions and split them according to the correct category. For more in-depth information, check out this link: Split and Exclude Transactions.

The information I provided should get you pointed in the right direction.

Stay in touch if you have additional questions about QBSE. Please know I’m just a comment away for help. Wishing you continued success.  

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@kimjones3 wrote:

Does anyone know how to enter and expense as a capital allowance with a split between business and personal use?.  I'm using the self employed software

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A capital allowance concerns buying fixed assets, plant and machinery and the like that report on the balance sheet

QBSE does not have a balance sheet, so you can not do that, nor can you record depreciation for the asset.

The UK version hopefully is more complete than the US version but in the US version

QBSE does not allow for any new accounts (categories) to be created
QBSE does not keep a customer listing
QBSE does not have a balance sheet so you can not enter the cost or the depreciation for a car/equipment
QBSE does not do inventory or cost of goods sold
QBSE can not do payroll
QBSE does not do  depreciation

Funny how almost EVERY rest for help is contact your accountant! My accountant gave the advice and it seems that Quickbooks Self Employed software is simply not capable of recording capital allowances. 

Quickbooks self employed UK software version does have a category for "depreciation expense" 

Thought I would share how I have learned to do this, along with several tips, which may help others as well as reminding me how to do it!  In short, it requires creating journal entries manually once you have setup a new single-asset pool.

Disclaimer: I am not an accountant, so cannot guarantee this is correct.  Not a major issue for me if this is wrong, as I mainly use QuickBooks to file VAT returns, as I file HMRC Self-Assessments manually using detailed spreadsheet records.  For what it is worth, I have spent many days studying what accountants and HMRC recommend.

1. With that out of the way, start by creating a new asset account following the simple steps in this link: Setup an asset account in QuickBooks Online.  If you are claiming it all in a given tax year under Annual Investment Allowance (AIA) then select Is sub-account?; if using Writing Down Allowances (WDA) then select Track depreciation of this asset instead, enterring the relevant details. Note that it must be its own "single-asset pool" as it includes personal use; this just means you need to create a new asset in QuickBooks and cannot include it within the main 'Machinery and equipment' asset pool for example.  It will probably be a 'tangible asset', if it is a physical item that has value; 'current assets' relate to stock you hold for resale, while 'non-current assets' are generally agreements, licenses and other non-tangible assets.
2. Once the new asset pool is setup, you can view it in the Chart of Accounts.  Select Account History for the new asset.  If you chose to track depreciation, it will be listed as 'Original Cost'.
3. Now select the existing entry and click Edit to open the journal entry.
4. You should have a Debit for the full asset cost, then another line for a Credit, which I assign to the Opening Asset Equity account.  Now it is just a matter of adding a new line for Credit and assigning it to Owner's Equity and apportioning the percentage of business and personal use between these two credit entries, so they total the debit entry.
5. Save, close then open Reports, Balance Sheet and you should see the new asset pool with the total asset value, along with the correct figures for the Opening Asset Equity and Owner's Equity accounts near the bottom of the report.

I have attached a screenshot of a journal entry showing you how it should look so that it balances and is apportioned between business and personal use.

Hope this helps!  If any experienced accountants notice errors, please let me know so I can correct it.