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Previously on "Expensing multiple laptops"

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  • PK2
    replied
    Originally posted by Lance View Post

    agreed.

    It needs disposing of. And if disposing of it means it has been sold personally that needs to be handled correctly.

    Once my older laptop is no longer needed I email the accountant "device xxxx has aged beyond it's useful lifetime and has been recycled".
    Yea exactly! It's not about me expensing or writing off multiple laptops to gain the system, give them away, etc.

    I wanted to know simply what would happen if I were to expense my work laptop now but later decided to upgrade and wanted to convert this one back to personal needs, or sell it on eBay.

    The title is a bit misleading.
    Last edited by PK2; 1 May 2022, 09:32.

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  • Lance
    replied
    Originally posted by northernladuk View Post

    He is over complicating it but I don't think that is the right answer. For a start you saying lie to your accountant and he can't do what he pleases. Just because it's depreciated on the books doesn't mean it's worthless. I think you have gone 180 and are over simplifying it there.
    agreed.

    It needs disposing of. And if disposing of it means it has been sold personally that needs to be handled correctly.

    Once my older laptop is no longer needed I email the accountant "device xxxx has aged beyond it's useful lifetime and has been recycled".

    Leave a comment:


  • northernladuk
    replied
    Originally posted by zonkkk View Post
    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.
    He is over complicating it but I don't think that is the right answer. For a start you saying lie to your accountant and he can't do what he pleases. Just because it's depreciated on the books doesn't mean it's worthless. I think you have gone 180 and are over simplifying it there.

    Leave a comment:


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

    Leave a comment:


  • zonkkk
    replied
    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.

    Leave a comment:


  • edison
    replied
    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.

    Leave a comment:


  • Lance
    replied
    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?

    Leave a comment:


  • PK2
    replied
    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.

    Leave a comment:


  • PK2
    replied
    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

    Leave a comment:


  • Maslins
    replied
    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.

    Leave a comment:


  • northernladuk
    replied
    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.

    Leave a comment:


  • PK2
    replied
    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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  • PK2
    replied
    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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  • WTFH
    replied
    Originally posted by PK2 View Post

    Well ok, I got slightly ahead of myself for the sake of simplicity.
    I was going to expense it in the coming days (since I need to start filling in my self-assessment for 2021-22)
    It was bought last November, not a particularly expensive one, I think it was around £850
    • It didn't occur to me that I should sell it to the company at a fair value when claiming it as an expense.
    • I guess that means I would claim it as a recent expense as well (when I started using it for my new assignment, rather than when I first bought it).
    • To be honest my company was still active when I bought it and I used it for training & accountancy, so could argue that I needed it for business purposes from the start (although back then I was working inside IR35 but I still kept my company active).
    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.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by PK2 View Post

    Well ok, I got slightly ahead of myself for the sake of simplicity.
    I was going to expense it in the coming days (since I need to start filling in my self-assessment for 2021-22)
    It was bought last November, not a particularly expensive one, I think it was around £850
    • It didn't occur to me that I should sell it to the company at a fair value when claiming it as an expense.
    Why did it not occur to you? Did your accountant not offer any guidance? You would have struggled to justify it if you were inside anyway so maybe better you didn't.
    I guess that means I would claim it as a recent expense as well (when I started using it for my new assignment, rather than when I first bought it).
    You'd claim it at the cost your company bought it for at the time the company needed it. If you can justify it from the beginning then claim it, if you can only justify it from the time you started the assignment then claim it. Just need to look in to the fact you were inside when you bought it and it was a while ago now so that horse might have bolted. Just put it through the books at a reasonable price now and have done with it all.
    • To be honest my company was still active when I bought it and I used it for training & accountancy, so could argue that I needed it for business purposes from the start (although back then I was working inside IR35 but I still kept my company active).
    Did you provide this information to your accountant when asking what to do? Not sure you could justify a new laptop for training and accountancy while you are inside but that's gone now.

    1. It makes sense being able to expense as many laptops as needed for work, but what if I convert my previous one back to personal use though?
    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.
    Last edited by northernladuk; 26 April 2022, 13:14.

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