How much does it actually save to buy something through your Ltd?

[d000hg]

I expect to make ~£60K this year, give or take, not sure if that's relevant. I am VAT registered. Since I work from home, any PC equipment I get can be bought through my Ltd.
I'm trying to work out how much it will save me, when both tax and VAT are taken into account. On something that costs £100 inc VAT, what's my saving?

[chris79]

Well it's being bought out the company's funds rather than money you've earned and paid tax on, so effectively you will be buying it 'tax free'. If you are a higher rate tax payer then you will be saving the equivalent of higher rate tax buying it out the business account, rather than out your own pocket.

Feel free to shoot me down if I'm wrong, I'm no accountant though.

[Ardesco]

You claim the VAT back (17.5%) and you will not have to pay CT on the money used to buy company equipment (21% , or has it gone up to 22% now?)

So with a £100 pound item you get a vat reclaim of £15~ and you don't pay CT of £18~. So a saving of around 33% before you take into account the extra tax for a higher rate tax payer.

[pmeswani]

You claim the VAT back (17.5%) and you will not have to pay CT on the money used to buy company equipment (21% , or has it gone up to 22% now?)

So with a £100 pound item you get a vat reclaim of £15~ and you don't pay CT of £18~. So a saving of around 33% before you take into account the extra tax for a higher rate tax payer.

What if one is on Flat Rate Scheme? Is the only real saving is the Higher Rate (if applicable) and CT?

[Sockpuppet]

Since I work from home, any PC equipment I get can be bought through my Ltd.

I'm a business


Working at home has nothing to do with it. The IT equipment bought must be for the company to use though. You can't buy a Dora the explorer game and expect to get the VAT back on it.

[VectraMan]

Working at home has nothing to do with it. The IT equipment bought must be for the company to use though. You can't buy a Dora the explorer game and expect to get the VAT back on it.

Yes but it would be a lot easier to justify a PC setup at home being for business use if you do full time work at home.

I'm using my company PC right now, though strictly speaking this isn't work.

What you "save" is slightly misleading because you don't own the PC. Which means down the line if you want the PC for personal use, or you go permie or something equally daft, you may have to buy the equipment from the company or possibly pay some kind of BIK.

[moorfield]

Somewhere in all that lot you can also depreciate the value of your PC against CT I think.

[BolshieBastard]

The only real 'saving' is that the company has bought the pc, not you. But, the company then 'owns' the pc. If the company buys a pc and you use it for personal use, I understand you personally have a tax expense on this.

The way I look at it is, if your company is buying, your co can at least claim the VAT back (excluding the flat rate scheme).

[ASB]

I expect to make ~£60K this year, give or take, not sure if that's relevant. I am VAT registered. Since I work from home, any PC equipment I get can be bought through my Ltd.
I'm trying to work out how much it will save me, when both tax and VAT are taken into account. On something that costs £100 inc VAT, what's my saving?

Is it an asset or an expense? The "something" you describe could be either. Are you on the FRS scheme? This all makes a difference.

If it's an expense and you are on the FRS then you will effectively save the CT on the amount and also any higher rate tax that is due. [given CT and standard rate are broadly equal]

If it is an asset then it is depreciated at an appropriate rate so the CT saving will be made over a number of years. If you in the FRS and not a higher rate taxpayer it make little real difference. You might be better buying it your self and renting the asset to the company.

Equally with expenses then it might be worthwhile not claiming them and claming them through you tax return (covered many time before). This can be advantageous if you fit a very specfici set of circumstances.

[HairyArsedBloke]

The IT equipment bought must be for the company to use though. You can't buy a Dora the explorer game and expect to get the VAT back on it.

Don't let it stop you trying. Shove everything you can think of through the books. Let the accountant calm you down later. It’s a war remember.