newbie question about hardware purchasing

**WTFH** · 25 August 2016, 02:46

The first answer will be "ask your accountant".

If it were me, I'd probably not buy a graphics card for work that had "Gaming" in its name (and hence on the receipt) e.g.
"MSI NVIDIA GeForce GTX 1060 6GB GAMING X Graphics Card"
Your accountant might not be happy passing that one off (unless you are designing games).

**MrMarkyMark** · 25 August 2016, 03:40

Originally posted by gixxer1k View Post

Hello, new i.t. contractor here, just started last month

I was wondering if anyone can advise as to if i can list a new graphics card (gtx1060 - ~260 quid from amazon) and/or a laptop (about 1k £) in my LTD expenses?

In all likelihood it's not going to be used 100% for work, but if we're going to be pendantic about it, neither did the desktop computer and laptop given to me by my last employer, there were days where my development mojo was simply not there and watching lolcats in youtube seemed more appealing than trying to decipher fix messages... Also, how is hmrc going to prove what you did with an asset in order to slam you with a fine anyway? wild guess based on the colour of mosfets on the pcb?

I would forget about the graphics card if buying it separately. Are you on the fixed VAT scheme, if so you will need to spend more than 1k to get the VAT back.

**NotAllThere** · 25 August 2016, 06:01

A graphics card could be treated as an asset and depreciated over time, but chances are it will be treated as a consumable. I doubt very much that the tax man will care if you are investigated that the card has the word GAMING in it's title. So long as he doesn't find any games on the machine (if they even dig that deeply), it's a non-issue. You could use it for research into GPU programming.

You'd only really be able to claim it though, if you're fitting it to a computer that belongs to your company, and that you really use that computer for business. With the laptop, the same applies - it must be primarily used for business and be necessary to your business.

http://www.accountingweb.co.uk/tax/p...t-and-services

**mudskipper** · 25 August 2016, 06:06

Originally posted by MrMarkyMark View Post

I would forget about the graphics card if buying it separately. Are you on the fixed VAT scheme, if so you will need to spend more than 1k to get the VAT back.

2k

**eek** · 25 August 2016, 07:22

The first rule is that you can't really put a company asset into a non company asset - if you want the video card it really needs to go into a company machine.

It's not a biggie your company could always buy your current computer off you using the going price on ebay as a guide but keep the comparisons just in case.

As NAT says all company computers really should be used for company
work. There is a question about how many computers a one person company can have I think Stek has about 37 though so don't worry about it.

Mind you its hard to play Fifa on a IBM mainframe...

**vwdan** · 25 August 2016, 07:37

Personally, the test I have for myself (Beyond the obvious legal side) is "Can I, in all honesty, look the tax inspector in the face and explain to him why I needed this for my business" and, if needs be, demonstrate it.

"Yes, I purchased this managed switch because I needed to replicate advanced network configurations in my lab that my customers may have."

**pr1** · 25 August 2016, 07:50

Originally posted by gixxer1k View Post

Hello, new i.t. contractor here, just started last month

I was wondering if anyone can advise as to if i can list a new graphics card (gtx1060 - ~260 quid from amazon) and/or a laptop (about 1k £) in my LTD expenses?

In all likelihood it's not going to be used 100% for work, but if we're going to be pendantic about it, neither did the desktop computer and laptop given to me by my last employer, there were days where my development mojo was simply not there and watching lolcats in youtube seemed more appealing than trying to decipher fix messages... Also, how is hmrc going to prove what you did with an asset in order to slam you with a fine anyway? wild guess based on the colour of mosfets on the pcb?

IMO,

you need a laptop to do your work (presumably) - HMRC won't bother arguing over whether you need a £400 laptop or a £2000 laptop so go nuts - bare in mind you're only saving on the tax (20%) - you're still buying it with your (company's) money

(IANAA/IANAA)

**VectraMan** · 25 August 2016, 08:06

Originally posted by eek View Post

The first rule is that you can't really put a company asset into a non company asset - if you want the video card it really needs to go into a company machine.

Is that really a rule?

FWIW I bought a desktop through the company not long after I first started as I was doing client work from home, and later on also bought a laptop which I mainly justified by saying "I'm an IT contractor", and although both were used on and off for genuine business work they were more often not. But my current laptop and desktop I bought personally. If something's a company asset it needs to be accounted for, and again if you sell it, whereas by owning things personally you can do whatever you want and never have to worry. In the unlikely event that an HMRC man did come round I can say "those are nothing to do with the company" and then I don't have to justify anything.

I'd have saved a bit of CT, but not VAT, so I decided it wasn't really worth it. But that's up to you.

**vwdan** · 25 August 2016, 08:13

Originally posted by pr1 View Post

IMO,

bare in mind you're only saving on the tax (20%) - you're still buying it with your (company's) money

I hear this all the time on here, but it's not just that. If you want to buy a £2000 incl VAT laptop you're saving £333 straight away in VAT, then another £333 in corporation tax making it a cost to your business of £1300 or so.

Alternatively, you pay CT on your current profits, draw it as a dividend, pay your 20% tax and then buy the laptop inclusive of VAT.

Bag of a fag packet calcs:

Laptop Cost: £2000 incl VAT

Buying Through Company
Company Funds: £10,000
Laptop Expense: £1600
Pre Tax Profit: £8400
Corporation Tax: £1680
Post Tax Profit: £6720
Company Funds: £6720

Buying Personally
Company Funds: £10,000
Laptop Expense: £0
Pre Tax Profit: £10,000
Corporation Tax: £2000
Post Tax Profit: £8000
Dividend Withdrawal: £2400
Laptop Cost: £2000
Personal Tax @20%: £400
Company Funds: £5600

Unless I've gone very wrong somewhere (Plausible, it's early) that's a difference of £1100 to your bottom line

newbie question about hardware purchasing