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Expensing multiple laptops

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    #11
    Originally posted by northernladuk View Post

    You don't convert them. You buy and sell them back to the company. Nothing wrong with having multiple laptops if you work demands it. Nothing wrong with the company selling an under powered one if it needs to buy a new one to suit business needs.

    You are over thinking all this and making it way more complicated than it needs to be.
    No just that my accountant is always hard to reach by phone and they don't reply in a lot of detail by email.

    That has made it a lot clear, thanks. I have heard some time ago that computers are subject to a 3 year depreciation rule, and I still have my old 4-year old laptop I've expensed back in the day but now it's used for personal needs and I didn't sell it back to myself or anything like that.

    Also yeah I understand that it would make more sense to expense it strictly at the time it became my work machine.


    So if I bought it last November for £850, and I've started using it for work in February:
    Say I expense it at the £750 valuation

    Then half a year later I'm on a different assignment inside IR35, or I upgrade to a different laptop, and would like this one back for personal use.
    I send £600 or so back to the company as income that's VAT-exempt (as otherwise I'll end up paying VAT twice and lose more than if I had not expensed it in the first place)?
    Last edited by PK2; 26 April 2022, 21:25.

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      #12
      Originally posted by WTFH View Post

      OK, can we have the full version of the story please.

      You bought a laptop personally in November 2021, is that correct?
      What make, model, etc is it?
      6 months later you have been asked to provide a laptop for your contract. Is that correct?
      You have sold it to your company already, or are you planning to?
      How much did you sell it to your company for? Or how much are you planning to sell it to your company for?
      When are you planning to sell it back to yourself?
      Is this in any way related to your post over a year ago where "your friend" was planning to buy a high end MacBook then close the company down, and you were unaware that when you close a company, assets do not become free?

      But if we take your current version of the story, you bought it for £850, you then checked on CEX for their selling price and discovered that it's worth £700 for you to sell it to your company.
      So that's how much you sell it to your company for.
      Your company keeps it for 6 months and CEX say it's worth £600.
      That's how much you can sell it back to yourself for.

      Now, if you tried to buy it personally for £850, then 6 months later sell it to your company for £850, then 2 months later sell it back to yourself for £600, then your accountant (and possibly the tax man) may have an issue. They'll also want to see receipts for things.

      northernlad and yourself have essentially said the same thing and have helped me clear the ambiguity around this, so thanks!


      My machine is a Lenovo Ideapad 5 Pro 16ACH6, cost me around £850 last November
      I've started this assignment in February so probably around £750 second hand by then

      So yeah that makes sense about expensing it at the value it's sold for at the time it became my work machine, and then buying it back at the price it'd be sold at that time.

      How would you pay the money back to the company? Would you tag it as non-VATable income (I'm VAT-registered, but obvioustly I've already paid the VAT through my personal purchase).


      With regards to my old post about a friend buying a MacBook I was curious how that'd work. As I remember at some point he was contracting for some other client at the same time so it may well be that his other contract was outside IR35? I guess if you know that you're about to start an inside IR35 then purchasing & expensing something like this just before is not justifiable. But if you genuinly are not sure if your next role is going to be outside and get an inside one, but keep your company active, then you could still be using that expensed laptop for training or interviewing, right? Unless you have no other computers around and really need this back for personal use.
      Last edited by PK2; 26 April 2022, 21:28.

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        #13
        No just that my accountant is always hard to reach by phone and they don't reply in a lot of detail by email.
        You need to get a better accountant. How do you pay it back to the company? Seriously, if your accountant isn't providing the service you pay for get a new one. We've quite a few people on here struggling with crap accountants and those that have made the move have never looked back. Don't put up with shoddy accounting services that leave you having to ask simple questions of your peers. It's not a good place to be in. Remember we are all just contractors on here, granted some with an excellent grasp of their accounts but still contractors none the less. You pay good money for your services, go somewhere that you get what you pay for. You'll thank me when you have and it's going well.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #14
          Originally posted by PK2 View Post
          How would you pay the money back to the company? Would you tag it as non-VATable income (I'm VAT-registered, but obvioustly I've already paid the VAT through my personal purchase).
          I'm afraid having already paid VAT is irrelevant here, and proceeding as you suggest will lead to repeated VAT hits.

          Remember you and your Ltd Co are separate legal entities. Your Ltd Co is VAT registered. You personally are not. Hence:
          - you buy the laptop (initially) for your personal needs. Presumably the vendor charged VAT, but you personally have no ability to reclaim this. You suffer the gross cost (no different to anyone else buying something for personal usage).
          - you sell the laptop to your Ltd Co. You personally are not VAT registered, so you don't charge VAT here.
          - your Ltd is VAT registered, but it wasn't charged VAT by you, so there's no VAT for it to reclaim.
          - your Ltd is now seemingly selling the laptop back to you. Your Ltd is VAT registered, so it must charge VAT on the sale, which you can't reclaim.
          You could repeat this if you liked, but there will be a VAT hit each and every time.

          In short, stop passing the laptop back and forward between you/your Ltd Co. Possibly you think you're being clever as you can be cheeky with the price each time so your business rather than you suffers most of the depreciation...but you're creating headaches all round, and will lose out too due to VAT on each sale.

          Comment


            #15
            Originally posted by northernladuk View Post

            You need to get a better accountant. How do you pay it back to the company? Seriously, if your accountant isn't providing the service you pay for get a new one. We've quite a few people on here struggling with crap accountants and those that have made the move have never looked back. Don't put up with shoddy accounting services that leave you having to ask simple questions of your peers. It's not a good place to be in. Remember we are all just contractors on here, granted some with an excellent grasp of their accounts but still contractors none the less. You pay good money for your services, go somewhere that you get what you pay for. You'll thank me when you have and it's going well.
            Well, I already switched some time ago, but every new accountant seems to forget about you with time. Also it got a lot more difficult to get in contact with them after COVID happened. Dread having to go through this again

            Comment


              #16
              Originally posted by Maslins View Post

              In short, stop passing the laptop back and forward between you/your Ltd Co. Possibly you think you're being clever as you can be cheeky with the price each time so your business rather than you suffers most of the depreciation...but you're creating headaches all round, and will lose out too due to VAT on each sale.
              How is it cheeky if I literally need this poor laptop for my work and (like suggested by the other), I expense it at a fair market value, then some time later decide I need to upgrade to a better one for work, so sell this one back to myself at a fair market value so I can use it personally again, give it away, sell on eBay, etc.

              But I guess it'll be more of a headache with double VAT so probably not worth it; I'll just upgrade to a new one and buy that straight from the company.

              Comment


                #17
                Originally posted by PK2 View Post

                How is it cheeky if I literally need this poor laptop for my work and (like suggested by the other), I expense it at a fair market value, then some time later decide I need to upgrade to a better one for work, so sell this one back to myself at a fair market value so I can use it personally again, give it away, sell on eBay, etc.

                But I guess it'll be more of a headache with double VAT so probably not worth it; I'll just upgrade to a new one and buy that straight from the company.
                you know that a company owned laptop can be used for personal purposes don't you?
                See You Next Tuesday

                Comment


                  #18
                  Originally posted by PK2 View Post

                  That has made it a lot clear, thanks. I have heard some time ago that computers are subject to a 3 year depreciation rule, and I still have my old 4-year old laptop I've expensed back in the day but now it's used for personal needs and I didn't sell it back to myself or anything like that.
                  Depreciation only applies to assets and your accountant should work out what type of depreciation it is (straight line, reducing balance etc.)

                  Some of my accountants have had different views on what could and couldn't be classed as an asset for depreciation, partly based on what seemed like an arbitrary value of £1000.

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                    #19
                    You're overcomplicating it. Just keep it as a company asset. Once it's depreciated, take it out of the books (i.e. tell you accountant it's not used anymore, broken, etc.) Now you can do with it what you please.

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                      #20
                      If your missus/the kids need a laptop, just get them (ie personally buy) some entry level jobby from currys and stop complicating things.

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