Contracting/expenses query

[pencil skirt 10]

Hi, I haven't been contracting long and just wondered if anyone can answer an expenses query:

 

If I need to buy a laptop for work for say £1000 and it is put through expenses so offset against my wage before tax, how much is it actually costing me? Would it be a simple case of the tax % I pay?

 

Thanks for any help.

[Chez2 10]

Don't you have an accountant to do your year end figures? My husband does our accounts but we wouldn't allocate such equipment to general expenses. If someone doesn't come back with the exact answer for you I will ask my husband about how he alloctaes things when doing our accounts.

[indizine 10]

Are you a limited company or sole trader?

[pencil skirt 10]

I'm with an Umbrella Company. They don't very often seem to give straight forward answers (but maybe there isn't one)....as it happens, they have come back to me saying that I can't put it through as it's classed as 'dual use' which is fair enough however I know other people that have done this. Hmmm....

[steveroberts 10]

Hi, I haven't been contracting long and just wondered if anyone can answer an expenses query:

 

If I need to buy a laptop for work for say £1000 and it is put through expenses so offset against my wage before tax, how much is it actually costing me? Would it be a simple case of the tax % I pay?

 

Thanks for any help.

 

This is not an expense you can offset 100% against tax (I think?).

 

In effect, the laptop becomes an asset of the business. The tax saving you will make is against the depreciation in its value (which is normally done over a 5 year period i.e. the tax saving will be £200 per year for 5 years).

 

You would not offset your wages against this; your wage is your wage and you have to pay tax on it regardless of any assets you might buy.

 

You should speak to an accountant to get proper advice about this.

 

Best of luck with the business.

[Chez2 10]

This is not an expense you can offset 100% against tax (I think?).

 

In effect, the laptop becomes an asset of the business. The tax saving you will make is against the depreciation in its value (which is normally done over a 5 year period i.e. the tax saving will be £200 per year for 5 years).

 

You would not offset your wages against this; your wage is your wage and you have to pay tax on it regardless of any assets you might buy.

 

You should speak to an accountant to get proper advice about this.

 

Best of luck with the business.

 

Thats vaguely how I remember our accountant explaining it. It would come out of the profits of your business and would affect VAT if you are VAT registered.

 

I don't understand the "dual purpose" thing as business lap tops are purchased as business equipment with business software on them and not as domestic lap tops.

[indizine 10]

If it's solely for business use, then it's a business expense, end of. If it's for personal use with a bit of work thrown in, then it's not really a business expense.

[steveroberts 10]

If it's solely for business use, then it's a business expense, end of. If it's for personal use with a bit of work thrown in, then it's not really a business expense.

 

A very grey area this; does watching BBC sport on the iPlayer constitute the private use of a Laptop?

 

This is one for the accountants, there will be tax rules for sole traders buying such equipment; as we are not sole traders, I have no idea what those rules are!

[Chez2 10]

A very grey area this; does watching BBC sport on the iPlayer constitute the private use of a Laptop?

 

This is one for the accountants, there will be tax rules for sole traders buying such equipment; as we are not sole traders, I have no idea what those rules are!

 

I don't see the problem. I set up my company and decided to be Ltd and go for VAT registration immediately. I had no turnover at this point only my own funds (directors loan) buying things to get set up. I had my own PC but wanted a lap top so I could give presentations to my customers. I purchased a business lap top with business software and put it through the books via my accountant. My accountant didn't have a problem with this and has no hesitation is mentioning any grey areas. I understand the rules may be slightly different for sole traders but there aren't many people who don't own their own pc or lap top these days.

[Bunderson 10]

Eesh umbrella companies. I've been LTD for a few years and have offset the cost of my laptop in the way steveroberts said above. You will need to seek advice from your umbrella but I cannot see why you couldn't offset it in the same way as if you were LTD?

[bossbuild 10]

Hey,

 

Your best bet would be to look into getting an accountant helping you out with the finances and tax side of the business if you are not fully sure how it works. if you didn't want to have the expense of an accountant then at least do some research online if you can find any information on the matter in question.

 

wish you all the best in business.

[MZ2832 10]

Hey,

 

Your best bet would be to look into getting an accountant helping you out with the finances and tax side of the business if you are not fully sure how it works. if you didn't want to have the expense of an accountant then at least do some research online if you can find any information on the matter in question.

 

My account's charges are less than I was paying for an umbrella company to look after my affairs. Umbrella was fairly useless, they weren't local, and were expensive. Have a lovely accountant who explains everything clearly.

 

Oh, and similar to Chez2, I have a business laptop purchased through the company. There was no issue with it. It is simply shown as a depreciating asset on the balance sheet.