setting up business & buying equipment

fiscalfreckles

In the process of setting up but will not start working for about another month, so have delayed registering & opening a business account until then.

However, I want to start purchasing computer equipment etc - can I do this now & claim back from the company later, or would it be better to set up the account etc first? I don't want to miss a bargain I've seen & could use my personal credit card.

antrobus

fiscalfreckles wrote: »

In the process of setting up but will not start working for about another month, so have delayed registering & opening a business account until then.

However, I want to start purchasing computer equipment etc - can I do this now & claim back from the company later, or would it be better to set up the account etc first? I don't want to miss a bargain I've seen & could use my personal credit card.

Is this a tax question? As in can I buy equipment before I start trading and then claim the capital allowances after I do start trading? In which case the answer is yes, as in:-

Treat expenditure incurred before a qualifying activity begins as incurred on the first day that the person who incurred the expenditure carries on the qualifying activity

http://www.hmrc.gov.uk/manuals/camanual/CA23020.htm

When you say 'the company' do you mean you have set up a limited company?

paddyrg

I don't know your circumstances, but just general advice... Don't spend a penny you don't need to spend. Cask is king. Money in the bank is worth much more than the equivalent amount in office furniture!

WPN

Consider leasing equipment - it can improve cash flow and has taxation advantages.

Pennywise

WPN wrote: »

Consider leasing equipment - it can improve cash flow and has taxation advantages.

What tax advantages? Leasing salesmen tell you there are tax advantages but in most cases there aren't.

These days you get full 100% (AIA) capital allowance on most equipment etc bought outright or on loan/HP in year of purchase which is far better than the tax relief you'll get my leasing.

If the equipment you're buying doesn't qualify for 100% AIA allowance, then leasing "may" indeed give a timing advantage for tax relief, i.e. get tax relief sooner than otherwise, but ultimately, either way you get tax relief on the payments made - no more, no less, so any benefits are cash flow only.

Also remember you'll probably end up paying more for leasing equipment because of the interest/charges, and there are a lot of sharks out there who will sell you a lease with inbuilt annual increases or fixed time periods where you have to pay (higher each year often) for equipment that no longer works or is out of date. There were some huge scandals re photocopiers and telephone systems a while ago where people ended up paying tens of thousands over a number of years for equipment costing a fraction of that with a shorter life!

By all means, consider leasing, but be very careful to make sure you know what the small print means and also that you understand how tax relief works compared between leasing and buying.

WPN

Indeed its something for the business to look into - many variables...

Cash flow is vital for a start up business - will delay growth otherwise.

fiscalfreckles

I agree with Pennywise re leasing - I have looked into it and some of the deals are ridiculous. As long as I have some cash to spend I would rather get a bargain and pay less in the long term.