Thinking of buying a laptop

[bradmca]

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Hi All Tax Gurus,

As I am registered self employed can I buy a nice new dell inspiron 1520 laptop for £650 (100% use for business, databases, web development) and claim the entire cost against taxed owed for the current year?

[cat]

Not a tax guru - so ignore everything below :-)
Yes, a laptop used for business, is a legitimate business expense so you can put it down as a business expense.
I would keep the receipt for at least 3 years, even if you are not (yet) VAT registered.
You may even be able to claim the VAT back if you register in the next 3 years.

[bradmca]

Great thanks for putting my mind at ease

And for the extra advice which I will hopefully need!.

Brad

[hrbs]

As I am registered self employed can I buy a nice new dell inspiron 1520 laptop for £650 (100% use for business, databases, web development) and claim the entire cost against taxed owed for the current year?

Hi

You can claim capital allowances, first year allowance at 40% of cost in year 1, 25% of reduced balance in year 2 ( ie 25% x £650x 60%), 25% of reduced balance in year 3 ( ie 25% x 75% x £650x 60%) . The laptop would be added to your capital allowance "pool". See HMRC self assessment helpsheet.

If you can demonstrate high use, eg high turnover/large number of websites, then you may be able to offset the full cost in your accounts on the basis that it is likely to wear out through use and be replaced in less than 2 years. ie the laptop becomes more of a consumable item than a business (capital) asset.

If your turnover is relatively low ie HMRC could correlate turnover with use/wear, you should stick with the capital allowance route, which is the statutory method.

The decision is yours and would be based on your particular circumstances. As you are self assessing your taxable profits, your decision would only need to be justified to HMRC if you are unlucky enough to have your accounts/tax return investigated. They may question the deduction against profits and if they do not agree with your treatment, adjust your taxable profit.

Regards

Keith
High Royd Business Services Limited
Small Business Specialists

hrbsonline.com - online accounting solutions
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