iPod and P11D

[Lewis]

I received a Tax Tips newsletter a while back that had an article saying that now HMRC are producing PodCasts you can claim an iPod as an expense. I did a google at the time and found many references on numerous accounting sites confirming this. So when I bought my iPod Touch which has lots of useful business features such as WiFi web browsing, email, calendar etc.. I put it through as an expense (at the time I had no company PC for email, web browsing etc. so it was effectively my company laptop). My accountants have listed it as a P11D item with a £0 benefit value. I'm not doubting this is correct but I am just trying to get my head around why this is. I gather from them it is because the iPod can have personal use and so it is a benefit. But what I don't get is if the benefit is £0 (i.e. it is 100% business use) why bother to put it on the form? I thought someone here would probably be able to clarify nicely for me.

[Ruprect]

Isn't it the other way round - 0% is your personal benefit?

[moorfield]

I received a Tax Tips newsletter a while back that had an article saying that now HMRC are producing PodCasts you can claim an iPod as an expense. I did a google at the time and found many references on numerous accounting sites confirming this. So when I bought my iPod Touch which has lots of useful business features such as WiFi web browsing, email, calendar etc.. I put it through as an expense (at the time I had no company PC for email, web browsing etc. so it was effectively my company laptop). My accountants have listed it as a P11D item with a £0 benefit value. I'm not doubting this is correct but I am just trying to get my head around why this is. I gather from them it is because the iPod can have personal use and so it is a benefit. But what I don't get is if the benefit is £0 (i.e. it is 100% business use) why bother to put it on the form? I thought someone here would probably be able to clarify nicely for me.

Lewis - same happened to me. I bought an ipod too (with the ltdco visa card). My accountants (same as yours) advised me it should be a personal item. and on P11D. The sum paid from the ltdco account they put against the directors account - said I should pay that back into the ltdco and that it goes on the P11D. It doesn't make sense to me and I'm still scratching my head.

[Lewis]

Lewis - same happened to me. I bought an ipod too (with the ltdco visa card). My accountants (same as yours) advised me it should be a personal item. and on P11D. The sum paid from the ltdco account they put against the directors account - said I should pay that back into the ltdco and that it goes on the P11D. It doesn't make sense to me and I'm still scratching my head.

That sounds odd to me. If it has gone on the directors account then doesn't that mean you have effectively just bought it personally? So why then put it on the P11D?

[Danbro]

Danbro Accounting Limited

Hi Lewis,

If the Ipod has gone to your Directors loan account then it appears that you purchased the Ipod personally and therefore this would get credited to your directors loan account for you to repay yourself or just set this off against advanced Dividends.

If you did purchase the Ipod privately then this would have to go on your P11d as its a personal expense, it would be £0 tax charge as it is wholly and exclusively necessary in the purpose of trade.

I am interested to know were this was shown on your P11d form, can you tell me which box it was in, private expenses normally get shown in section N and any boxes in blue are non taxable

Thanks

Neil

[Lewis]

Hi Lewis,

If the Ipod has gone to your Directors loan account then it appears that you purchased the Ipod personally and therefore this would get credited to your directors loan account for you to repay yourself or just set this off against advanced Dividends.

If you did purchase the Ipod privately then this would have to go on your P11d as its a personal expense, it would be £0 tax charge as it is wholly and exclusively necessary in the purpose of trade.

I am interested to know were this was shown on your P11d form, can you tell me which box it was in, private expenses normally get shown in section N and any boxes in blue are non taxable

Thanks

Neil

Hi Neil, Thanks for the reply. Sounds like you can have items with £0 tax charge on the form then. It sounded odd to me. I haven't seen my actual form as yet, my accountants have just provided a printout from their system of what will be going on P11D at this stage.

Moorfield, if you want to put yours through as an expense just ask the accountants to move the amount from your Directors loan account to expenses. They might feel an iPod is pushing the limits of reasonable expenses but I am sure they will do this for you.

Incidentally I read that an iPod can be claimed in "Tips and Advice Tax". Issue 22 (September 2007). It says "Taxman has launched new poscast service ... you can download lectures/seminars/training material from other places too... get your company to buy an iPod for training material. It's tax deductable for the company and not a benefit in kind for the user". So are they wrong on this? I would think if it is not a BIK then it should not be on the P11D.

[Danbro]

Danbro Accounting

Hi Lewis,

In response to your lates post, the Ipod would only go on your P11d if you paid for it personally as the P11d has to report all expenses paid personally and reimbursed to you from your company.

Also, if you paid for it personally the ipod would in theory be in your Directors Loan Account but in your favour, ie increasing the amount that is owen to you as the director or reducing the amount you owe to the company.

So in summary the tax tips is correct and your accountant do appear to have reflected this correctly.

Thanks

[Lewis]

Hi Lewis,

In response to your lates post, the Ipod would only go on your P11d if you paid for it personally as the P11d has to report all expenses paid personally and reimbursed to you from your company.

Also, if you paid for it personally the ipod would in theory be in your Directors Loan Account but in your favour, ie increasing the amount that is owen to you as the director or reducing the amount you owe to the company.

So in summary the tax tips is correct and your accountant do appear to have reflected this correctly.

Thanks

Sorry if I am being dense but I am still confused.

I bought the iPod personally and was reimbirsed by company check as per a normal expense. Moorfield bought his using his company Visa and it seems the accountants have disallowed it as an expense and moved the amount to his directors loan account instead.

Assuming expensing an iPod for business use is allowable, I'm still not sure if it is a BIK or not? If it is not a BIK as tax tips say does it still need to go on the P11D? What is confusing me is that I thought a P11D was for listing Benefits so if something isn't one then why does it go on the form?

[Danbro]

Danbro Accounting Limited

Sorry if I am being dense but I am still confused.

I bought the iPod personally and was reimbirsed by company check as per a normal expense. Moorfield bought his using his company Visa and it seems the accountants have disallowed it as an expense and moved the amount to his directors loan account instead.

Assuming expensing an iPod for business use is allowable, I'm still not sure if it is a BIK or not? If it is not a BIK as tax tips say does it still need to go on the P11D? What is confusing me is that I thought a P11D was for listing Benefits so if something isn't one then why does it go on the form?

Hi Lewis,

In your circumstance the treatment appears to be correct, your IPOD hasnt been classed as a benefit in kind and is on your P11d as you purchased this personally.

Moorfields appear completely different, it appears that his IPOD has been treated as dissallowed and put to his directors loan account and therefore not included in his accounts as an asset. I cant see how this would then go on his P11d and potentially it may not have done if he repaid the funds, if that occured it would be almost like the transaction didnt occur.

Thanks

[Nixon Williams]

The P11d records benefits and expenses.

So if you have had expenses reimbursed by your company they would appear on the P11d. When you prepare your tax return, the expense can be claimed as a business expense and so no tax is due.

If someone has repaid a sum to their company to cover an expense claimed in error, then this should not be shown on the P11d.

If you are claiming an ipod for business use then you should record the usage that you have downloaded and listen to podcasts etc that relate to the business.

Alan