Question for anyone clued up on self employment and taxes

Stinky

Stinky

Stinky

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Ive been self employed now since June 2009 just paid up for my first year etc.

however i have been told that i can claim 100% of the value of a new laptop against my tax. is this true?

for example my laptop is used at work for everything i do, from invoicing to emails, making notes etc so if i was to upgrade to a MacBook Air would the full £1000(ish) be duducted from my end of year tax bill? or only a percantage? im still not 100% how it works.

also if you upgrade every year can you claim it every year? or do you have to keep it for x amount of yrs ?

thanks :)
 
If the purchase is necessary for you work then yes definitely put it down as a business expenditure. You can even deduct the bus fare you bought to go and buy the MacBook from your earnings!

I think the rules are slightly different if the purchase is half business half pleasure then you would only put down 50% of the price as an expenditure.
 
Yes you do have a certain amount you can claim back and offset against tax (some travel, equipment, stationary etc). However I'm not sure if this has to be done on a monthly basis or whether you can do it all at the end of the year. I'm sure the HMRC site will explain (though it won't be made super clear!)
 
I would say a computer is a capital allowance. You claim 50% the first year and 25% the following years until it's all claimed for.
 
Usel said:
I would say a computer is a capital allowance. You claim 50% the first year and 25% the following years until it's all claimed for.
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Close. There's no first year allowances at present, and the annual writing down allowance is 20%.

However, there is, instead, the annual investment allowance, which allows you to deduct 100% of up to £100k of qualifying expenditure on fixed assets in the year to 5 April 2011.

So in short, OP... buy the laptop and you can indeed deduct the cost.

However, if there is an element of mixed use, then you should only claim the amount that can be said to relate to work i.e. if you use the laptop 80% for work, 20% for looking at pr0n on your breaks, then you can only deduct 80% of the cost.

/tax adviser, but not your tax adviser, this is not advice, we have no engagement, etc
 
Laptop is a fixed asset?
Good good, anyway as said, you'd need to be able to demonstrate when asked that all was for work, no no pvt emails, no shared use, no gaming (macbook, lol anyway).
 
vonhelmet said:
Close. There's no first year allowances at present, and the annual writing down allowance is 20%.

However, there is, instead, the annual investment allowance, which allows you to deduct 100% of up to £100k of qualifying expenditure on fixed assets in the year to 5 April 2011.

So in short, OP... buy the laptop and you can indeed deduct the cost.

However, if there is an element of mixed use, then you should only claim the amount that can be said to relate to work i.e. if you use the laptop 80% for work, 20% for looking at pr0n on your breaks, then you can only deduct 80% of the cost.

/tax adviser, but not your tax adviser, this is not advice, we have no engagement, etc
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thanks a lot

so one more question. i have bought a laptop this financial year already. but.... once april comes around can i then claim for another? ideally id then use laptop one just at home and laptop two as my work only one. keep everything separate just easier that way lol
 
Stinky said:
thanks a lot

so one more question. i have bought a laptop this financial year already. but.... once april comes around can i then claim for another? ideally id then use laptop one just at home and laptop two as my work only one. keep everything separate just easier that way lol
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Assuming they're both used entirely for business purposes, then yes.

You could buy both in one year anyway, nothing stopping you.
 
I think he means buy a new one, and make the old work one into a personal non work one.

In that case does he have to 'buy' it off the company?

I'm also interested in this as will likely be self employed through an lc soon and need to buy a laptop and software for the job.

Am I right in saying say if before you would be paying tax on say 10k, if you spent 1k on a laptop purely for business, you then would only pay tax on 9k rather than 10?
 
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Ev0 said:
I think he means buy a new one, and make the old work one into a personal non work one.

In that case does he have to 'buy' it off the company?

I'm also interested in this as will likely be self employed through a plc soon and need to buy a laptop and software for the job.

Am I right in saying say if before you would be paying tax on say 10k, if you spent 1k on a laptop purely for business, you then would only pay tax on 9k rather than 10?
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In answer to your question - yes, you would deduct the cost, assuming it was a period to which the annual investment allowance applied.

If the OP appropriated the laptop from the business for his personal use, he'd be treated as 'buying' it from the business at Market value, regardless of whether any money changed hands. The proceeds would be deducted from the balance on the relevant capital allowances pool, effectively limiting the allowances he could claim and increasing his tax charge. If the proceeds would reduce the balance on the pool to below zero - entirely possible if all general pool additions has been fully written off using the annual investment allowance when the additions were made - then the amount below zero would be added back to his profits and taxed.
 
whys it all so confusing :(

basically i claim (well keep reciepts and give them to my account ) for all fuel for my van, food while i am away working (like now 10 weeks working everyday) clothes i use for work, phone bill, internet dongle (while away) any van costs MOT Tax insurance bla bla bla!


so my laptop now was bought for £290 june last year, so if i now make that personal and a MBA business i would "effectively" pay £1000 for the MBA but then deduct £290 from that as i am "buying" the 1st laptop off the business? so could deduct £710 from my tax bill
 
Stinky said:
so my laptop now was bought for £290 june last year, so if i now make that personal and a MBA business i would "effectively" pay £1000 for the MBA but then deduct £290 from that as i am "buying" the 1st laptop off the business? so could deduct £710 from my tax bill
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Can I just check:

1) Laptop 1 was purchased June 2010 for £290?
2) Laptop 1 was then used entirely for business purposes until the present?
3) You intend to bring laptop 1 out of the business for personal use and purchase laptop 2 for £1,000 in, say, March 2011?

Is that all correct?

If you can estimate the market value of laptop 1 at the time you bring it out of the business (March 2011? £200 maybe?) then I can show you how this works. I just need to check a couple of things in the legislation, and my set is at work rather than at home, as there's a couple of things I'm uncertain of. I'll get back to you tomorrow.
 
As many have said of course the laptop is tax deductible.

Even if you use it for gaming 20% of the time, you can still 100% claim it.

Naturally this means

1) If your company gets sued, they can take your laptop to take the costs
2) If you sell the company, or the company goes bankrupt, you lose the laptop
3) If you sell the laptop the money you get in has to be treated as a capital gain to the company (and put through the companies accounts).


Still, they depreciate at 33% a year - so after 3 years you can sell it to yourself for £1.

You can buy two (or thirty two) against the company if you want. Whether the IR audit you or not (which costs you on average £10,000 even if you've done nothing wrong) - the chances are upped the more risk you take.

My brother is an accountant to a pub landlord - he claimed his shampoo through the company stating 'my customers wouldn't stand for it if my hair was dirty'. fair enough. Got an audit within days of submitting the claim.
 
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Don't listen to Britboy, he's wrong. You can't claim the full cost if it's used for gaming because you are self employed. You also can't claim you're selling it to yourself for £1 if that isn't the open market value. There's also no way the revenue would entertain a claim for shampoo, outside of a hairdresser or a hotel. Selling a laptop will not give rise to a capital gain due to the chattels exemption.
 
vonhelmet said:
Don't listen to Britboy, he's wrong. You can't claim the full cost if it's used for gaming because you are self employed. You also can't claim you're selling it to yourself for £1 if that isn't the open market value. There's also no way the revenue would entertain a claim for shampoo, outside of a hairdresser or a hotel. Selling a laptop will not give rise to a capital gain due to the chattels exemption.
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Don't listen to vonhelmet he's wrong. Ask any accountant - you CAN claim the full cost even if you part time use it for gaming. The fact you use it partly for gaming is 100% IRRELEVENT as long as its majority used for business as far as your tax is concerned. Otherwise anyone that, say, used any purely company laptop to email their wife at lunchtime, or put a background of a picture of their daughter on the thing -- would be committing tax fraud!!!!! :) Vonhelmet - ask your accountant - computers are different from other goods because of the government madly trying to persuade the UK to become tech savvy basically ...!

And of course you CAN sell it to yourself for £1 after 3 years as computer depreciation is set at a fixed 33% a year (used to be 100% per year depreciation allowed! the good old days!). Not sure where von got the idea that every laptop on the market is going to be somehow separately valued by the IR, every single year, to ensure businesses are selling them to private individuals for enough money!!! I mean - what?

There is indeed no way the revenue would entertain a claim for shampoo, the claim can still be made though - exactly as I said.
 
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Where and how does the tax man even know what you're claiming for specifically? I've been self employed for three years and my tax return only includes a box to enter the total figure for capital expenses - there's no specifics at all.

Also, there's no guide on how much / what percentage you should claim for business / personal use with regards to items like computers etc. Or even what you can and can't claim for. It's all guesswork. It's like they don't want you to know exactly what you should pay.
 
banja said:
Where and how does the tax man even know what you're claiming for specifically? I've been self employed for three years and my tax return only inludes a box to enter the total figure for capital expenses - there's no specifics at all.

Also, there's no guide on how much / what percentage you should claim for business / personal use with regards to items like computers etc. Or even what you can and can't claim for. It's all guesswork. It's like they don't want you to know exactly whay you should pay.
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From my very simple understanding of it you can claim for whatever you like, personal holidays the lot but if they think there's something untoward going on they will go over your life with a fine tooth comb unless you can prove what you claimed for was an expense that was 100% down to the business.
That's why some accountants are rather creative :p
 
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