Reply to: Renting equipment

[r0bly0ns]

Sorry mate, I checked, I'm pretty certain you're wrong about this

(1) See here: http://www.hmrc.gov.uk/guidance/selling/examples.htm
Example 2 and example 6

(2) When I went Ltd, I sold various computers etc that I had previously owned personally to MyCo, on my accountant's advice. There was no extra personal income tax due on the money I received.

EDIT: the OP was asking about an existing computer he already owned. This is important, witness example 2 above, "His original purchases were for personal use and he is selling items that he has owned for some time"

Hmmm.....
you have sparked something in my memory about being able to sell a certain amount of personal items before having to declare the income, I think £100 is probabally below this limit so in the example I quoted above there would be no tax to pay.

[Platypus]

In the example highlighted, you would have to pay income tax on the £100 (if you have earned mored than the 5k tax threshold), as you personally owned the computer before selling it to the company, therfore the £100 is classed as income to you for selling your personal property.

Sorry mate, I checked, I'm pretty certain you're wrong about this

(1) See here: http://www.hmrc.gov.uk/guidance/selling/examples.htm
Example 2 and example 6

(2) When I went Ltd, I sold various computers etc that I had previously owned personally to MyCo, on my accountant's advice. There was no extra personal income tax due on the money I received.

EDIT: the OP was asking about an existing computer he already owned. This is important, witness example 2 above, "His original purchases were for personal use and he is selling items that he has owned for some time"

[r0bly0ns]

Do you mean on the rental income or on the income from the sale?

I buy a computer in my name for £100, sell it to MyCo for £100? Do I have to pay personal income tax on the £100? I would think no.

But I do believe I would have to pay tax if I rented it to MyCo for say £20 / month.

In the example highlighted, you would have to pay income tax on the £100 (if you have earned mored than the 5k tax threshold), as you personally owned the computer before selling it to the company, therfore the £100 is classed as income to you for selling your personal property.


If the company bought the computer in the first place for £100, then it is nothing to do with you as you never owned it.

You could buy the computer on behalf of the company for £100 out of your own pocket, then claim the £100 back from the company as an expense. Is this what you mean?

[malvolio]

That is what I said if you read the original post...
It was a touch of irony. Perhaps I should highlight the important parts for you in future.

Obviously. It's been a long week and it's only Wednesday...

[Moscow Mule]

Define significant. I would argue that my personal computer use is not significant when compared to its business use. Not to mention, all of the computer equipment that my company owns is kept in my office that I run the business out of, not loaned to me as an employee. It just so happens that my office is at home and accessible to me 24/7.

I don't personally see how they could get me on that.

You've persuaded me - MyCo will be purchasing a Macbook this afternoon...

[Ardesco]

So long as there is no significant personal use?

http://www.hmrc.gov.uk/employers/ebi.../computers.htm

I guess if anybody asked, I'd just lie.

Before 6 April 2006 there was an exemption for the first £500 of the cash equivalent of the benefit associated with a computer loaned by an employer to an employee. This exemption was abolished from 6 April 2006.

From 6 April 2006 a computer loaned to an employee is treated in the same way as any other asset

However, if the computer is provided solely for business use and any private use is not significant, the computer continues to be exempt from a benefit charge

Define significant. I would argue that my personal computer use is not significant when compared to its business use. Not to mention, all of the computer equipment that my company owns is kept in my office that I run the business out of, not loaned to me as an employee. It just so happens that my office is at home and accessible to me 24/7.

I don't personally see how they could get me on that.

[Moscow Mule]

Yes at all. If you personally earn income from YourCo by renting things you personally own out to YourCo, it's taxable.

That is what I said if you read the original post...

Which is the point I was making:

Mal: He hasn't thought this through
MM: Not at all.

It was a touch of irony. Perhaps I should highlight the important parts for you in future.

[malvolio]

Not at all Mal.

Yes at all. If you personally earn income from YourCo by renting things you personally own out to YourCo, it's taxable.

[Platypus]

I guess if anybody asked, I'd just lie.

say it was R&D

EDIT: Ditto for purchasing things like iPods through the company.

[Moscow Mule]

No BIK on computers.

So long as there is no significant personal use?

http://www.hmrc.gov.uk/employers/ebi.../computers.htm

I guess if anybody asked, I'd just lie.

[Platypus]

No, but there would be a tax liabillity on the income received as a result. Hasn't really thought this through, has he...

Do you mean on the rental income or on the income from the sale?

I buy a computer in my name for £100, sell it to MyCo for £100? Do I have to pay personal income tax on the £100? I would think no.

But I do believe I would have to pay tax if I rented it to MyCo for say £20 / month.

[Moscow Mule]

Can MyCo rent equipment (laptop, printer, hard-drive) from myself for a portion of time per month?

Would it be treated as an offset to corp tax liability but income on my SA form?

I'm assuming it's not worth the effort since a search on the board reveals nothing.

No, but there would be a tax liabillity on the income received as a result. Hasn't really thought this through, has he...

Not at all Mal.

[malvolio]

No BIK on computers.

No, but there would be a tax liabillity on the income received as a result. Hasn't really thought this through, has he...

[Platypus]

I don't want my personal use of the equipment to be taxed as BIK?

Who would know?

[Ardesco]

No BIK on computers.