Upgrade/Purchase personal laptop on business account?

[Clare@InTouch]

I've just become aware of a potential problem with this issue of selling personal assets, such as a laptop, to a company.

This page: HM Revenue & Customs: Capital allowances and Corporation Tax , lists some exclusions, including:

"plant and machinery previously used for another purpose - for example a computer used at home and introduced into your company or organisation"

This suggests to me that you would need to add the value of the item back on to your profit in order to calculate corporation tax due. However, a writing down allowance of 20% might be available on it? Either way it might still be the right decision to sell such items to your company - but I can't see it being quite as clear-cut as I thought.

Perhaps one other way would be to classify the purchase as expenditure rather than an asset purchase. For small amounts (I've heard £500 presented as a reasonable amount, but there doesn't seem to be any clear rule) this would avoid the issue altogether.

Any advice?

The link above does indicate that you can't claim the annual investment allowance of 100% on such items, but you're correct that you could still claim the 20%.

For items costing under c£500 I would always classify them as expenditure rather than capital - an item costing that much is unlikley to be worth anything in a years time as technology is obsolete so quickly these days.

[matzie]

I've just become aware of a potential problem with this issue of selling personal assets, such as a laptop, to a company.

This page: HM Revenue & Customs: Capital allowances and Corporation Tax , lists some exclusions, including:

"plant and machinery previously used for another purpose - for example a computer used at home and introduced into your company or organisation"

This suggests to me that you would need to add the value of the item back on to your profit in order to calculate corporation tax due. However, a writing down allowance of 20% might be available on it? Either way it might still be the right decision to sell such items to your company - but I can't see it being quite as clear-cut as I thought.

Perhaps one other way would be to classify the purchase as expenditure rather than an asset purchase. For small amounts (I've heard £500 presented as a reasonable amount, but there doesn't seem to be any clear rule) this would avoid the issue altogether.

Any advice?

[SueEllen]

I am going to buy a new laptop for my Ltd Co, so can I actually sell the current laptop from myself for say half price, or a fair price, and then after few months can I buy a new one? I read somewhere that the cost of asset in case of laptops is limited to few years. So I was thinking of selling the original laptop to someone after that few months. The entire transaction would be like follows.

1) Ltd co buys the original laptop from me. The market value of the laptop currently is £350, so can sell it for £199.
2) Due to depreciation, the cost of laptop would be nearly £0 in next 6 months. The laptop is already about 3 yrs old.

If your laptop is that old then it looks like you are doing a scram.

Why would a company buy a piece of kit for it's only employee to dump 6 months later?

I suggest you find a sold price of the same laptop with the spec information, and take a print out of it for your records. Then charge the company that price.

3) I will buy a new laptop, brand new from a retailer.
4) I can use the old laptop as a part exchange, or sell it on ebay to raise some cash for my ltd co. I am thinking of selling that to my wife? Or may be if the asset value is £0, just gift it to someone?

As the laptop is new to your company I would sell it on ebay then buy a new one.

[riffpie]

How long ago did you buy the laptop? If its less than six months old, you can sell it to your company at what it cost you new. Older than that, for a fair market price.

[rd409]

I am going to buy a new laptop for my Ltd Co, so can I actually sell the current laptop from myself for say half price, or a fair price, and then after few months can I buy a new one? I read somewhere that the cost of asset in case of laptops is limited to few years. So I was thinking of selling the original laptop to someone after that few months. The entire transaction would be like follows.

1) Ltd co buys the original laptop from me. The market value of the laptop currently is £350, so can sell it for £199.
2) Due to depreciation, the cost of laptop would be nearly £0 in next 6 months. The laptop is already about 3 yrs old.
3) I will buy a new laptop, brand new from a retailer.
4) I can use the old laptop as a part exchange, or sell it on ebay to raise some cash for my ltd co. I am thinking of selling that to my wife? Or may be if the asset value is £0, just gift it to someone?

Is this possible at all?

[VectraMan]

Perhaps the £450 Yourco is about to spend on an old outdated laptop could be better spent on a new one? Just a thought.

If you're working full time on the laptop, there really shouldn't be any question of it not being for business use.

[nfoote]

Sweet!

Quick look at eBay, somewhere in the 250-350 range maybe, not huge but always nice to put one up against the taxman Plus the new battery/charger are about another 100quid on the expense sheet.

Cheers guys.

[d000hg]

I think that the only catch is that a second hand laptop may not be worth very much, but so long as it's a reasonable price then you're OK.

Yes I doubt the value is much at all. But you can definitely do it.

[Wanderer]

there's nothing wrong with selling the laptop to the company as long as you sell it for fair market value. I also agree with looking at Ebay to see what a similar laptop would sell for.

I think that the only catch is that a second hand laptop may not be worth very much, but so long as it's a reasonable price then you're OK.

[Clare@InTouch]

I agree with matzie - there's nothing wrong with selling the laptop to the company as long as you sell it for fair market value. I also agree with looking at Ebay to see what a similar laptop would sell for.

The company can then also buy the new parts.

[matzie]

Re your fanciful brainwave - I don't think there's anything fanciful about it at all. If you bought it from somebody else - for a fair price, for business use, as a commercial transaction, it'd be fine, and would be a straightforward asset purchase (ie would show on your balance sheet, would be part of your annual investment allowance etc). Buying it from yourself is equally straightforward and quite common. My advice though is to just be really careful that the price you sell it to your company for is fair - I've taken the lowest price I could find for the equivalent on ebay for my transactions of this type. My accountant concurs with this advice, but you should check with yours of course

HTH

Matt

[nfoote]

So I have a laptop that I'd obviously bought with my personal money long before I started MyCo.

It now gets used for both personal and business work, my current contract is even work from home so full 8(ish) hours a day is being used to generate funds for MyCo.

It also now needs a new battery and charge circa 100quid.

Question 1; Can I purchase the replacement parts for my personal laptop under the company accounts and claim the associated tax benefits?

Question 2 / Fanciful brainwave 1; Given that the machine is being used currently for so much business work, and even when its not used directly as a coding machine for a contract its still used to source new contracts, email agents etc etc, can MyCo just "purchase" the laptop from me? IE transfer a fair market price from MyCo account to my personal account and put it down as a business purchase, claiming the associated tax benefits. And then of course purchase a new battery etc for the business' new laptop. Ha it sounds pretty delusional even just writing it down but thought I'd ask