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Broadband through the business

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    Broadband through the business

    I've never put the costs of broadband through the business - despite it being essential for my business - because it has always been in my name and therefore isn't claimable.

    I'm now seriously considering binning my Sky broadband and landline and getting Virgin fibre. Their business packages are a lot better value, even before considering the VAT saving. I'm currently paying £39/month for basic line rental and 38Mbps /10Mbps unlimited DSL and the basic Virgin business package is £30 + VAT/month for 350+Mbps/7Mbps.

    Because this would be in the business name, then my understanding is that this is fully tax deductible without incurring a BIK so long as "private use" is not significant. "Not significant" in this case is the same rule that applies to any other assets or services supplied by MyCo for my use (e.g. a laptop) - i.e. it's not about how much time is spent on business/personal use but more about how important it is to do my job.

    From https://www.gov.uk/hmrc-internal-man...anual/eim21617

    Section 316 (see EIM21610) exempts from tax assets or services provided by an employer in the employee’s home solely for work purposes, as long as any private use is not significant (see EIM21613).

    Where an employer provides for Internet access at the employee’s home solely for work purposes, under a package where there is no separate billing or record of access calls, and no breakdown is possible between work and private calls, we accept that where private use is not significant (and private use does not affect the cost of the package) the costs of connection are exempt from tax under Section 316.
    On what constitutes significant private use, suitably vague from HMRC as usual, but:
    https://www.gov.uk/hmrc-internal-man...anual/eim21613

    “Not significant” is not defined in statute. However where:

    the employer’s policy about private use is clearly stated to the employees and sets out the circumstances in which private use may be made (this may include making the conditions clear in employment contracts or asking employees to sign a statement acknowledging company policy on what use is allowed and any disciplinary consequences if this policy is not followed), and
    any decision of the employer not to recover the costs of private use is a commercial decision, for example based on the impractical nature of doing so, rather than a desire to reward the employee,
    From what I can tell this would be absolutely fine. It's clear that I cannot do my job without a broadband connection. There will obviously be private use, but on the basis of the above I think it's reasonable to say it's not significant.

    The only question mark is on whether or not any VAT reclaim should be apportioned, though as we're only talking about £72/year in VAT it's probably not a big concern.

    Yes I plan to ask my accountant, I was just wondering if anyone else did this?
    Last edited by TheCyclingProgrammer; 16 November 2017, 14:14.

    #2
    I have both a BT line and due to a couple of awkward skype meetings earlier this year the company also pays for the 300mb virgin line.

    The company pays for the virgin line (its in the company name and the VAT) I personally pay the BT line... I suspect HMRC will never investigate but I think I'm covered as the virgin line is additional...

    Next year my plan would be to move to Vodafone or whoever else provides the cheapest openreach "fibre" option...
    merely at clientco for the entertainment

    Comment


      #3
      Originally posted by eek View Post
      I have both a BT line and due to a couple of awkward skype meetings earlier this year the company also pays for the 300mb virgin line.

      The company pays for the virgin line (its in the company name and the VAT) I personally pay the BT line... I suspect HMRC will never investigate but I think I'm covered as the virgin line is additional...

      Next year my plan would be to move to Vodafone or whoever else provides the cheapest openreach "fibre" option...
      In my case I'd be getting rid of the Sky broadband/landline as I'd have no further need for it. I can't find anything in HMRC guidance about it being an additional line, just that it needs to be in the company name.

      Another good argument for the business plan, besides the higher speed and cost, is the SLA and faster response times. This alone would justify it to me, the issues I've had going back and forth between Sky and BT Openreach when things go wrong...

      I guess this comes down to what I've often said to others on here. If, under inspection, I felt I could justify it, then go for it.
      Last edited by TheCyclingProgrammer; 16 November 2017, 14:20.

      Comment


        #4
        Hi TCP

        I've had first hand experience of a client going through a PAYE compliance check and the inspector picking up on a broadband package provided at the Director's home address. Long story short they weren't happy that private use was insignificant and thus assessed the director on a BIK, although this was equivalent to £5 p/m so hardly worth it in the scheme of things (IMO).

        Their situation was probably slightly different in such that they didn't work full time from home (which I think you may do?) so it was harder to argue about the private use being insignificant compared to someone who works from home almost exclusively.

        Funnily enough the VAT reclaim wasn't questioned/brought up as that is the area I thought would have been more at risk but for the money involved this really wouldn't be a worry of mine.

        My general advice is to not claim for home broadband but in your case I think there is an argument to do so.

        As Eek also says, it's a much easier argument (almost guaranteed to 'win' IMO) if the business line/broadband is an additional one.

        Martin
        Contratax Ltd

        Comment


          #5
          ContrataxLtd - thanks for the info. I do work from home around 80-100% of the time. Closer to 100% these days. I have a dedicated garden office (paid for personally) for this reason.

          So it seems like the worst case scenario is that a tax inspector decides that (at worst) 50% usage is private, therefore I'd be assessed on a BIK to the value of 50% of the monthly cost (so £216/year @ my marginal rate, £86/year if that's higher rate plus some NIC)?
          Last edited by TheCyclingProgrammer; 16 November 2017, 14:31.

          Comment


            #6
            Originally posted by eek View Post
            I have both a BT line and due to a couple of awkward skype meetings earlier this year the company also pays for the 300mb virgin line.

            The company pays for the virgin line (its in the company name and the VAT) I personally pay the BT line... I suspect HMRC will never investigate but I think I'm covered as the virgin line is additional...

            Next year my plan would be to move to Vodafone or whoever else provides the cheapest openreach "fibre" option...
            I have done similar since I started contracting simply because I cannot get BT fibre at my address. There is a black hole in my locality where some addresses just cannot get BT fibre. BT claim it is due to electrical problems in the area.

            As I only need the faster connection for work my business pays for the Virgin business broadband.

            However I have a phone and slower speed more unreliable broadband on a BT line with some random supplier which I change frequently in my name.

            I would have got rid of the home phone and broadband completely but:
            1. Virgin randomly takes their systems down for up to a full day without telling you - you can complain and get some money back but the money won't cover the amount you lost by not working. With a slow line you can still do some work so invoice for that day.
            2. There have been a few times when the nearest mobile transmitters to me covering all networks - I've checked with neighbours - have been out, so I've not been able to make phone calls by mobile phone. A few online meetings have weird connections so the only way to get connected is to dial-in.
            "You’re just a bad memory who doesn’t know when to go away" JR

            Comment


              #7
              Originally posted by SueEllen View Post
              I would have got rid of the home phone and broadband completely but:
              1. Virgin randomly takes their systems down for up to a full day without telling you - you can complain and get some money back but the money won't cover the amount you lost by not working. With a slow line you can still do some work so invoice for that day
              I've considered keeping the Sky on the next package down for this reason, but I object to paying something I'd hardly ever use (especially having to keep the landline which has crap quality and again, we hardly ever use it). I do have decent 4G reception here and can tether as backup.

              Waiting to hear back from my accountant but seriously considering just going ahead with this.

              What I don't understand is why the business plans are cheaper than the residential plans. It's nearly £50/month for the 300/350+ residential packages.

              Comment


                #8
                Originally posted by TheCyclingProgrammer View Post
                ContrataxLtd - thanks for the info. I do work from home around 80-100% of the time. Closer to 100% these days. I have a dedicated garden office (paid for personally) for this reason.

                So it seems like the worst case scenario is that a tax inspector decides that (at worst) 50% usage is private, therefore I'd be assessed on a BIK to the value of 50% of the monthly cost (so £216/year @ my marginal rate, £86/year if that's higher rate plus some NIC)?
                Is it 50%? You use it for 8 hours a day for business. The rest of the family use it for much more than that evenings and weekends? They are streaming and other data intensive reasons so usage is nowhere near 50% either? You are gonna have a job defending that figure even if it's true aren't you? Is it worth it?
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  Originally posted by northernladuk View Post
                  Is it 50%? You use it for 8 hours a day for business. The rest of the family use it for much more than that evenings and weekends? They are streaming and other data intensive reasons so usage is nowhere near 50% either? You are gonna have a job defending that figure even if it's true aren't you? Is it worth it?
                  I don't have to defend the proportion of time, because that isn't what's used in determining whether or not personal usage is significant or not.

                  I also use my laptop and iPad for non-business purposes, but as they're essential to doing my job the personal use is not considered significant. I don't see how the broadband is any different.

                  Comment


                    #10
                    Originally posted by northernladuk View Post
                    Is it 50%? You use it for 8 hours a day for business. The rest of the family use it for much more than that evenings and weekends? They are streaming and other data intensive reasons so usage is nowhere near 50% either? You are gonna have a job defending that figure even if it's true aren't you? Is it worth it?
                    If someone is "voluntarily" paying 50% BIK on their business broadband you think HMRC are gonna bother pushing for another 10,20,30%? No way

                    Comment

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