Expensive Coffee Machine as Expense

[emanuelricardo]

I am an IT contractor operating under my own limited company. So far I've had a handful of contracts all outside IR35 for different clients with the shortest contract lasting just under 3 months and the longest contract being 6 months.

So far I've been mostly commuting to the client's office in order to carry out the contracted work. At each client's office I had access to coffee which I made heavily use of.

Besides the contract work I also run a couple internet websites which currently make a small revenue, but my plan for this year is to shift my focus away from contracting and more to growing my own online businesses with the intention to them becoming my company's main source of income.

Because I am planning to work predominantly from home going forward I purchased an expensive bean to cup coffee machine (~£1600). At home I have a dedicated room as my office from where I work on my two internet businesses as well as the occassional contract work. I have placed the coffee machine in my home's kitchen, because it frankly doesn't make sense to place it in my office where other facilities like a fridge with milk or a sink to wash a cup are not in immediate distance. It would be simply stupid not to have it there even though this coffee machine has been bought for the company only.

I didn't have a coffee machine before I decided to work from home on my internet businesses, because I only drink coffee for work and previously I was getting coffee for free at each client's office.

As an IT contractor and software developer I need coffee to carry out my work. I cannot focus without caffeine and it is an essential thing for me to carry out the nature of my cognitive work.

I am confident that I should be able to expense this coffee machine and book it as a business asset, but my accountant told me that I can't. I am pretty sure he is wrong or at least I really don't see why I shouldn't. Am I missing something, because I couldn't find any guidance by HMRC which would explain why this is not acceptable?

[cojak]

Running a sideline as a pop-up coffee house then? Or are you developing AI code for a fancy remote coffeemaid? Because that’s the only way I can see getting that receipt through.

Spending £400 on a coffee machine is impressive.

Spending £1600 is just taking the piss.

(Oh, and you can get your caffeine from £10 cafetière.)

[TheCyclingProgrammer]

I have a coffee machine which I purchased through the business and it sits in my garden office. It’s only a Nespresso though so not really that extravagant. I only use it when I’m at work and I keep a separate supply of company purchased pods that are only compatible with that machine. I even have a completely separate Nespresso account for the company. Accountant was fine with this. Employers are allowed to provide coffee facilities for their employees and its tax deductible.

An expensive £1600 machine though? I think you’d have a hard time convincing a tax inspector that it’s wholly and exclusively for business purposes and that you haven’t also bought it to use it outside of work hours. Especially if you are keeping it in the kitchen. HMRC were not born yesterday.

It’s your company so if you want to spend that kind of money it’s up to you. It will likely qualify for a corporation tax deduction (probably capital allowances) but IMO you run the risk of it attracting a BIK charge if it’s ever queried.

As it’s a company asset made available to you as a director the primary test will be: is there any personal use and if so is that personal use “significant”. It’s easy to meet that test with something like a laptop as it’s something you need to do your job (which generally makes personal use insignificant). A coffee machine isn’t though and the fact that it’s a posh machine sitting in your kitchen would make it hard to convince that any personal use is not significant.

[TheGreenBastard]

I have a coffee machine which I purchased through the business and it sits in my garden office. It’s only a Nespresso though so not really that extravagant. I only use it when I’m at work and I keep a separate supply of company purchased pods that are only compatible with that machine. I even have a completely separate Nespresso account for the company. Accountant was fine with this. Employers are allowed to provide coffee facilities for their employees and its tax deductible.

An expensive £1600 machine though? I think you’d have a hard time convincing a tax inspector that it’s wholly and exclusively for business purposes and that you haven’t also bought it to use it outside of work hours.

It’s your company so if you want to spend that kind of money it’s up to you. It will likely qualify for a corporation tax deduction (probably capital allowances) but IMO you run the risk of it attracting a BIK charge if it’s ever queried.

Does the price have a bearing on it? Maybe if he keeps it in his office, like you, it qualifies (assuming your claim as a business expense is valid irrespective of price).

If you're a coffee head then there's a massive difference between a Linea Mini and a Nespresso - does that justify spending thousands on it? Room to grow too as such machines have decent output, for his "staff" of course

[TheCyclingProgrammer]

Does the price have a bearing on it? Maybe if he keeps it in his office, like you, it qualifies (assuming your claim as a business expense is valid irrespective of price).

If you're a coffee head then there's a massive difference between a Linea Mini and a Nespresso - does that justify spending thousands on it? Room to grow too as such machines have decent output, for his "staff" of course

I think the price of the machine would influence the judgement of a tax inspector who will look at the overall picture, as would the location of the machine. It’s not a hard and fast rule. It would be down to an inspectors judgement whether or not there is a significant enough personal benefit to justify a BIK charge.

Compare:

1. Inexpensive coffee pod machine, separate supply of pods that only work with that machine, kept in a completely separate standalone garden office building, with no obvious motivation for it to be used outside of working hours given I can make myself an equivalent cup of coffee at home in the kitchen. Obvious effort made to keep company and personal coffee facilities separate and distinct.

Versus:

2. Expensive, fancy coffee machine, kept in OPs kitchen. No other coffee facilities available at home other than the company bought machine. Very likely to be used outside of work hours by OP, their family and to offer visitors coffee.

If you were a tax inspector which one would you say is taking the piss?

[Old Greg]

Make sure your household claims from your Ltd a monthly fee for rental space in your kitchen (1% of your house's nominal market rental value) and also for electricity and water. You can also charge your Ltd a reasonable fee per cup washed up in your dishwasher.

[mudskipper]

My client had a 65" 4K TV in the canteen area for staff to watch on their breaks. I think myCo might get one for me to watch on breaks. It frankly doesn't make sense to put it in my study as it's too small, so I'll keep it in my lounge. But it will only be for company use.

What do you think?

[TheGreenBastard]

I think the price of the machine would influence the judgement of a tax inspector who will look at the overall picture, as would the location of the machine. It’s not a hard and fast rule. It would be down to an inspectors judgement whether or not there is a significant enough personal benefit to justify a BIK charge.

Compare:

1. Inexpensive coffee pod machine, separate supply of pods that only work with that machine, kept in a completely separate standalone garden office building, with no obvious motivation for it to be used outside of working hours given I can make myself an equivalent cup of coffee at home in the kitchen. Obvious effort made to keep company and personal coffee facilities separate and distinct.

Versus:

2. Expensive, fancy coffee machine, kept in OPs kitchen. No other coffee facilities available at home other than the company bought machine. Very likely to be used outside of work hours by OP, their family and to offer visitors coffee.

If you were a tax inspector which one would you say is taking the piss?

So to be legit, OP could buy both, and have the Nespresso in his kitchen and the expensive one in his office. Take that pesky tax inspectors!

[Old Greg]

My client had a 65" 4K TV in the canteen area for staff to watch on their breaks. I think myCo might get one for me to watch on breaks. It frankly doesn't make sense to put it in my study as it's too small, so I'll keep it in my lounge. But it will only be for company use.

What do you think?

Don't forget the new shower room for after you've cycled back from business meetings at client premises.

[Old Greg]

So to be legit, OP could buy both, and have the Nespresso in his kitchen and the expensive one in his office. Take that pesky tax inspectors!

And a small herd of dairy cattle.