Getting my company to buy my equipment...

[XLMonkey]

Why would this have to be treated as personal income as all of the assets I paid for with wages i've already been taxed on?

the tax liability applies to the difference between purchase price and sale price of the asset. So, if you bought it at 500 and sold it to the company at 750 then the 250 would have to be reported on your personal tax return.

I was responding to MikeP's point about how the company would have to treat the cost of reconfiguring a computer bought from, e.g. ebay...but, of course, if you sell it to the company at or below the price you paid for it, then it's all a bit academic.

[davisc02]

Why would this have to be treated as personal income as all of the assets I paid for with wages i've already been taxed on?

[davisc02]

I've just made a list of assets, all my cd's equipment, pc,laptop, routers,flat screen, wireless modem, manuals etc and have listed an in "between" figure of Ebay and brand new prices and sent it off to my accountant. She's just come back saying its fine and I can now withdraw £7500 tax free.

[XLMonkey]

thanx for the replys. Still wondering who would decide market value, surely the IR wouldn't have a clue how much a router, HP DL380 with 4gb RAM or Exchange 2003 would be second hand, even on Ebay these can vary greatly depending on persons feedback etc

truth is, the IR couldn't really give a monkey's about the price, as long as the total is below the original purchase price (the numbers you're talking about are way way below their threshold of interest).

...but, since I've got my know-it-all hat on today...

market value is determined by reference to any publicly available source of information about trading in the goods or services being considered. so, eBay does count, but so does PC World. As long as the market that you refer to when setting the price is meets the criteria above, then you can use it.

You're right, but IIRC a PC can be written off over two years these days, so you could sell it to your company for half what you paid for it.

sort of correct, but...the HMRC guidance on depreciation of assets such as computer equipment applies to the sale of goods from a limited company, rather than from a private person. In addition, since you are an "interested party" (i.e. you both own the company, and you own the equipment that the company is buying), the guidance on calculating book value doesn't apply. Instead, you should use the market value.

The time you need to invest into getting that 150 quid machine reformatted, reinstalled, reconfigured etc is a real cost.

absolutely right, but it's a cost to your business, not to you. So, regardless of how you describe it, if the company pays you to do it before it buys the assets, then that cost has to be entered onto your balance sheet. Similarly, the benefit (i.e. the payment made from the company to you) has to be treated as personal income on your tax return.

[Fleetwood]

its

You're right, but IIRC a PC can be written off over two years these days, so you could sell it to your company for half what you paid for it.

[MikeP]

Methinks it's not what it's worth to some ebayer, but what it's worth to YOU. As expat partly indicated, you're not buying a secondhand PC for 150, you're buying a fully working and - more importantly - preconfigured piece of kit that is to your spec and has all your software and everything set up. The time you need to invest into getting that 150 quid machine reformatted, reinstalled, reconfigured etc is a real cost.

Value goes up pretty quickly when you look at it that way. Another angle is that in pure accounting terms 20-30% depreciation a year is acceptable, so even that way a 2 year old £800 PC is still worth a good 400-500.

Ebay value only becomes relevant when you buy the kit back from your company at the end of it's useful life

[davisc02]

thanx for the replys. Still wondering who would decide market value, surely the IR wouldn't have a clue how much a router, HP DL380 with 4gb RAM or Exchange 2003 would be second hand, even on Ebay these can vary greatly depending on persons feedback etc

[mcquiggd]

eBay as market value? Tell the IR you were offered 20% of £11.5 million for your keyboard... it's the market value in Nigeria....

[expat]

You have to buy it at market value (i.e. the ebay figure). Anything in excess of market value has to be entered as goodwill on your balance sheet (and as income on your tax return).

Does ebay count as "market value"? A bit unfair considering that proces below market value is what most people go on ebay for. And anyway, his PC is different from one on ebay: it's known to be working.

[XLMonkey]

I'm currently filling out a spreadsheet to list assets I had before my company was set up. This is so my company can purchase them, my accountant has said put a reasonable figure on what the assets are worth but how do you come up with thsi figure?

You have to buy it at market value (i.e. the ebay figure). Anything in excess of market value has to be entered as goodwill on your balance sheet (and as income on your tax return).

[davisc02]

I'm currently filling out a spreadsheet to list assets I had before my company was set up. This is so my company can purchase them, my accountant has said put a reasonable figure on what the assets are worth but how do you come up with thsi figure?

Compaq pc, still around £800 new but could get it now for £150 on Ebay, Windows 2003, Exchange, VMware, Office XP/2000/2003 CD's, Cisco 2950 router etc etc. I suppose my question is do you put a "what you would have to pay for it new" figure on it or a "second hand/ebay" figure on it?

Cheers