Laptop purchase and self-employment

windlepoons_2

I recently left full-time employment to take up work as a self-employed software developer. The work that I conduct is limited to one organisation, and I invoice the company at the end of each month. I've also recently purchased a laptop to conduct work on (although this is unlikely to be used solely for business purposes). It is possible to claim deductions on tax against the cost of the laptop purchase, or could someone provide a link to more information on this?

dlon_ray

This section of businesslink should help:
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1086384583&r.l1=1073858808&r.l2=1086692188&r.l3=1086445219&r.l4=1086384131&r.s=sc&type=RESOURCES

PlutoinCapricorn

I bought a laptop when I became self employed, and claimed 75% of the cost as part of my expenses. As I earned under the limit, I just had to give the total expenses and not itemise them. Many people advise going by the book and treating it as a capital item, but I decided to put it in with the stationery, printer ink etc. to keep things simple.

I just do consulting, so have no business to sell of which the laptop would be an asset. I estimated that personal use would be 25%.

Are you sure that HMRC would view your relationship with your client as self employed? They are cracking down on "false self employment".

windlepoons_2

PlutoinCapricorn wrote: »

Are you sure that HMRC would view your relationship with your client as self employed? They are cracking down on "false self employment".

I'm not sure what would characterise "false self employment". Would you be able to provide more information?

PlutoinCapricorn

"False self employment" is when someone is an employee in all but name.

There are several things to look for, but someone who has no other clients and who gets regular payments over a period of time with no end date may arouse suspicion, if HMRC ever investigate the client.

Can you turn work down? Do you have a contract of service or a contract for services? Are you getting around 1/3 more than an employee doing the same work would? Did you negotiate a deal with the client or did they set all the terms?

skater_kat

PlutoinCapricorn wrote: »

I bought a laptop when I became self employed, and claimed 75% of the cost as part of my expenses. As I earned under the limit, I just had to give the total expenses and not itemise them.

may i ask what limit you are refering to?

also, how much did you spend on a laptop. I am newly SE and need to get one. However i wonder what HMRC consider a reasonable spend for a laptop, as I could easily buy a £1500 macbook but likewise you can get a laptop for £300 too.

skater_kat

PlutoinCapricorn wrote: »

"False self employment" is when someone is an employee in all but name.

There are several things to look for, but someone who has no other clients and who gets regular payments over a period of time with no end date may arouse suspicion, if HMRC ever investigate the client.

Can you turn work down? Do you have a contract of service or a contract for services? Are you getting around 1/3 more than an employee doing the same work would? Did you negotiate a deal with the client or did they set all the terms?

in which case would HMRC pursue the client or the contractor regarding this scenario?

InsideInsurance

Potentially both depending on the legal structures being used.

Most organisations wont employ a sole trader contractor because it opens them up to possibility of HMRC deciding they are a concealed employee so insist that the contractor either goes through an umbrella company (in which case all is fine as they are a bonified employee) or forms a Ltd. If it is the later you then get into the challenges of IR35, if you are inside IR35 then despite being a Ltd things like salary -v- dividends are then set at a minimum ratio (basically removing much of the benefit of the Ltd). It is the contractor that runs the risk of IR35 rather than the client.

PlutoinCapricorn

The threshold for self-employment income that determines whether you need to give details or just totals i.e. reduced reporting is around £70,000. It increases from time to time: it was £15,000 then £50,000.

If your SE income is under this in the tax year, you just need to report total income, total expenses and total profit. If you file online, you will be asked if you are under, and be shown three boxes to complete. This means that you do not need to list exactly what your expenses were, so some people do include 'hardware' as opposed to declaring them as capital items. You end up paying the same amount of tax in either case.

My laptop cost £800, and I just included in my expenses. You need to decide what you really need, based on your business, and be able to justify it. I needed a lot of storage and something reliable, as I do my work online and produce a lot of documents.