Deducting tax on a second hand laptop bought privately on Ebay/Loot - possible?

jkodav

Hi,

I'm self-employed and I need to buy a newish secondhand laptop for my business. I want to get a Lenevo Thinkpad, a particular model that is far too expensive for me to buy new. They come with a 3 year warranty that is transferable, so a second hand model that's only 6 months old would be fine for me and you can get them much cheaper than the new models.

I can prove that it will be used for my business only. I know that if I buy it new from a retailer with a proper invoice that I can declare it as part of my tax return. I've been told that I can either declare it in the capital allowance section or, at a pinch, as an 'allowable business expense' (i.e. as part of my net profit/loss).

Two questions:

1/ My main question is, can I declare a computer that has been bought privately, second hand (either via Ebay or via a site such as Loot)? If so, what sort of paper work would I need from the person selling it to me? Obviously, it would have to have their full name and address (and mine as well). Would it need to be signed? What format should it follow? Technically, would it be an invoice, a receipt, or just a small contract saying something like 'I, XXX of YYY am selling this used laptop ZZZ (serial number etc.) to AAA of BBB on [Date] for £xyz pounds cash, as a private sale'. Would something like that be acceptable/sufficient for the HMRC, or can you not declare an item like this in your tax return?

Should I have/keep any other support documents (printout of the online advert, etc.)?

2/ Less important at this stage, but if I can do the above, can I get away with declaring it as an allowable business expense or would I have to declare it as a capital allowance (a computer seems to be a bit ambiguous in this respect)? I would have no intention of selling it again later, so i would carry on using it until it breaks down or becomes obsolete/worthless.

Any and all advice is very welcome, but I would be particularly interested if anyone has had some feedback about this from an accountant or the HMRC.

Thanks

chrismac1

The more documentation you have, the more likely this will stand up to an enquiry or inspection. Currently you can claim capital allowances of up to £100k per tax year, so whether you expense it or treat it as capital it's not likely to affect your tax bill.

latinaid

I can't see why there would be any problem with you claiming it - it is a legitimate business expense, surely whether it is new or 2nd-hand is irrelevant.

HMRC told me that anything costing over about £200 should come under Annual Investment Allowance.

MrBeans

Doesn't matter how you buy it.

Over how many years can IT equipment be written off? At one time it was one year making the expenditure effectively the same as an allowable business expense. Not sure if it's still one year though.

latinaid

If you claim the entire cost under the Annual Investment Allowance, you have in effect 'written off' the entire cost in the first year of purchase. However, if your business folds within a certain number of years, HMRC will claim back the tax on the asset. I can't remember how many years I was told - 7, I think? I don't know if there is any difference between IT equipment and any other type - after all, it does become obsolete very quickly these days.

ITtim

I have a similar situation, I purchased a second hand mac from a friend which I use only for my (very small) business. Since I have no invoice or reciept can I claim this as an expense?