Reply to: Depreciation of company PCs etc

[SlipTheJab]

FTFY

ouch

[northernladuk]

I think we've got the wrong end of the stick, folks.

Your company's PC is utterly worthless useless.

FTFY

[Lance]

I think we've got the wrong end of the stick, folks.

Your company's PC is utterly worthless.

Both of them

[northernladyuk]

I think we've got the wrong end of the stick, folks.

Your company's PC is utterly worthless.

[MB2]

Assuming the hardware is worth anything significant, this probably isn’t the most tax efficient approach AFAICT.

If you buy them, then the company will have to pay a balancing charge on the sale of the asset before the remainder is distributed as capital subject to CGT.

I believe as OP will receive any assets as part of the capital distribution and any value will be used to calculate the capital gain charge that buying them is pointless.

Unless I’m missing something?

It depends if he wants the PC I guess ? The PC presumably is in his accounts currently (assuming 33% depreciation) at 66% of what he paid for it. If he only realises 100 for it then yes he puts 100 into the assets as cash for CGT/distribution but he has removed the 66% of value from the books and reduced Corp Tax by that amount. It probably is one for the accountants as usually we keep our stuff for more than 3 years and then say is scrapped and is not a liquidation.

If he wants the PC then I think that must be the least cost to him - assuming was a 600 desktop he has had VAT and corp tax against 500 and paid 100 (OK 125 as after tax money) - which he then gets taxed on at 10% ?

[SlipTheJab]

No I aint. No desktop support experience ever. Server maybe,

Repeat after me.... 'have you tried switching it off an on again'

[psychocandy]

2014 laptop is worth nothing as you should have depreciated it already.
2016 desktop..... pick a price you like. You’re the desktop support specialist so who can argue with your valuation?

No I aint. No desktop support experience ever. Server maybe,

[northernladuk]

Unless I’m missing something?

A frontal labotomy so you can think at PC's level.

HTH

[TheCyclingProgrammer]

First off, is the equipment listed as an asset on your books? Have you been depreciating it since purchase? Over three years is normal.

Then you need to determine if there is any residual value on your books vs market worth. A comparison against ebay or other second hand retailers will give you an idea.

You tell your accountant you're buying the kit off the company for the value your research has determined. YourCo ought to invoice you for the sale of the asset.

The accountant enters the relevant journals.

Assuming the hardware is worth anything significant, this probably isn’t the most tax efficient approach AFAICT.

If you buy them, then the company will have to pay a balancing charge on the sale of the asset before the remainder is distributed as capital subject to CGT.

I believe as OP will receive any assets as part of the capital distribution and any value will be used to calculate the capital gain charge that buying them is pointless.

Unless I’m missing something?

[SeanT]

Laptop is worth SFA as it's three years old, desktop is worth about £100 because what's one of those!

[northernladuk]

You need to be investigated which isn't likely to happen and then it would have to be a blatant piss take to ping on their radar. It's peanuts in the bigger scheme so just do it properly and sleep at night.

[Lance]

Closing down limited for now (Inside IR35 PC via umbrella) and have to deal with depreciation of company owned PCs. Account has asked me to decide....

Got a laptop from 2014 and a desktop from 2016. What sort of percentages should I be using for current value?

Whats best approach?

2014 laptop is worth nothing as you should have depreciated it already.
2016 desktop..... pick a price you like. You’re the desktop support specialist so who can argue with your valuation?

[psychocandy]

We use 33% a year over 3 years for PCs but if a liquidation then 2nd hand value is fair - presumably you are going to buy it from the company ? In which case I would get a quote from someone who buys old IT kit and provided you pay that it I don't see a problem. You could possibly justify a little less for a "safe sale" or insist on a quote "cash up front" ?

Yeh I was thinking laptop over 3 years old so zero. PC is just over a year so I was thinking maybe 50% what I paid for it.

Is there any comeback if you don't get this right? i.e. what is seen as taking the p*ss? It doesnt affect CT anyway though does it?

[northernladuk]

I don't understand why the accountant isn't providing you guidance on this.

[MB2]

We use 33% a year over 3 years for PCs but if a liquidation then 2nd hand value is fair - presumably you are going to buy it from the company ? In which case I would get a quote from someone who buys old IT kit and provided you pay that it I don't see a problem. You could possibly justify a little less for a "safe sale" or insist on a quote "cash up front" ?