Buying IT equipment (laptop and a powerful server) using my personal credit card

[Sunny0183]

I just started my first limited company and yet to open a business bank account. But i need to buy IT equipment ASAP. can i do that using my personal credit card? and since each of the items will be over £2000, can i claim VAT back and show them as initial capital expenditure for the business?

thanks

[Bellona]

I just started my first limited company and yet to open a business bank account. But i need to buy IT equipment ASAP. can i do that using my personal credit card? and since each of the items will be over £2000, can i claim VAT back and show them as initial capital expenditure for the business?

thanks

over 2k on a laptop - what are you buying ??

[eek]

over 2k on a laptop - what are you buying ??

A decent Macbook Pro would be my recommendation.

[Jeremiah@RHJAccountants]

If it is a legitimate business expense and wholly and exclusively for the business it can be bought personally and claimed back through the business.

If you are VAT registered under the flat rate scheme and you buy the equipment on one invoice and it costs above £2K you can claim the VAT back on the purchase.

As per the HMRC website:

HM Revenue & Customs: Flat Rate Scheme for VAT

Hope that helps

Jeremiah
RHJ Accountants

[northernladuk]

Remember. Nearly all of this money comes out of your pocket. All you are saving is the 20% corporation tax. It isn't free at all which is common mistake newbies make. Agreed 20% discount is very nice but it's not enough to get a bit giddy with the credit card because you think it's free from the company. Your choice but bear this in mind.

[ASB]

A particularly zealous vat inspector could disallow the vat reclaim if you dont have the company name on the invoice.

this is a general principle for all purchases except those which are specifically allowed otherwise, which is mainly subsistance.

[TheCyclingProgrammer]

Remember. Nearly all of this money comes out of your pocket. All you are saving is the 20% corporation tax. It isn't free at all which is common mistake newbies make. Agreed 20% discount is very nice but it's not enough to get a bit giddy with the credit card because you think it's free from the company. Your choice but bear this in mind.

Not just the CT in this case though. VAT too, so not too shabby.

OP: paying for them on a personal credit card isn't ideal but you have a genuine reason to, not having the business bank account open yet, so should be ok.

IMO you should still ensure that the invoice for the goods is in the company name, especially if you intend to reclaim the VAT. No P11D implications as far as I'm aware as you are technically paying on the companies behalf rather than your own behalf.

For the purposes of your books, you might want to show this as an entry in the directors loan account rather than the expense account (to differentiate this from a normal expense claim). Your accountant can advise here.

You can reclaim the VAT on the FRS on a single purchase of capital goods from the same supplier if the VAT inclusive total is over £2k. HMRC do not specify precisely but a single purchase is normally taken to mean a single invoice but be aware that some suppliers split a single order into multiple invoices (and payments!). This shouldn't be an issue as long as you can clearly show it was all placed as a single order in the event of an HMRC enquiry (there are a few threads about this if you search). They all have to be from the same supplier though.

[Sunny0183]

If it is a legitimate business expense and wholly and exclusively for the business it can be bought personally and claimed back through the business.

If you are VAT registered under the flat rate scheme and you buy the equipment on one invoice and it costs above £2K you can claim the VAT back on the purchase.

As per the HMRC website:

HM Revenue & Customs: Flat Rate Scheme for VAT

Hope that helps

Jeremiah
RHJ Accountants

Really appreciate your help

I am hoping to buy Lenovo W540 with 32GB and 512 SSD with i7 4900MQ quad CPU. Unfortunately for sharepoint 2013 this is the minimum spec

[mudskipper]

re: VAT

If you're not registered for VAT yet:

You can reclaim VAT on purchases made in the six months before registering. The 2K limit does not apply.

Something I wish I'd known before I registered - worth seeing if you can pay accountant a year up front for example.

Edit: http://www.hmrc.gov.uk/vat/start/reg...s-before.htm#1

Goods for 4 years, services for 6 months - BUT the purchase does need to be made by the entity registering for VAT, i.e. your business.

Might be worth checking with your accountant whether you can get the invoice made to the business and pay for it personally via a director's loan?

[ContrataxLtd]

Remember. Nearly all of this money comes out of your pocket. All you are saving is the 20% corporation tax. It isn't free at all which is common mistake newbies make. Agreed 20% discount is very nice but it's not enough to get a bit giddy with the credit card because you think it's free from the company. Your choice but bear this in mind.

NLUK

You also save the VAT when it's over £2k so the laptop effectively costs £1,333 so a saving of £667 (33.3%) when isn't too shabby in my book. You save even more if you take into account the high rate tax you possibly haven't had to pay on this money but that's a 50/50 argument at best.

If you were looking to buy a laptop at around £1,666 then you are no worst off spending £2,000 but should get a better spec machine.

Agreed though, a lot of new contractor's do get confused thinking expenses are free from their company, or that somehow HMRC reimburse them for all the expenses they incur which is a costly mistake to make!

Martin
Contratax Ltd