Self employed - can I claim a computer rental as expense

sazzlefrazzle99

Hi all,
I've just started working freelance and need to get a computer. Was planning to buy a computer but am now looking at HardSoft, a company that rents out company computers.

Would I be able to claim this against my earnings like I would if I bought a computer, or not? I can't find any information about it online! Any help much appreciated

Pennywise

Yes, the same rule would apply for renting as for buying if you're a sole trader using "cash basis". You'd claim whatever the proportion of your business use versus personal use, so if you used it half/half, then you'd claim half as an expense against income.

sazzlefrazzle99

I'm not a sole trader, I'm working via a LTD company currently made up of just me but looking to expand - is it still the same? And I have a personal computer already, it's just not good enough for the work I do - can I claim the whole cost of the leased computer if I don't use it for personal stuff?

I've never understood splitting based on personal use, surely they have no way to prove if it's 100% business? (I've always wondered)

Thank you for getting back to me!

dawid1914

i am also wondering about this

dawid1914

how do i do this?????????????????????

Pennywise

You don't apportion if it's a limited company that buys the goods. As long as private use is "trivial" there's no benefit in kind. If private use isn't trivial, then there's a benefit in kind taxable on you according to fixed rules (not according to how much private use there is).

As for "prove" of private use, it's a matter of you being able to persuade HMRC should they investigate you. If all you need a computer for is basic admin, but you buy a top of the range gaming computer, then you'll have a hard job persuading HMRC that you use it fully for business, but if you buy a bog standard Dell then it's a lot easier to persuade them! (unless your business is writing games software!).

sazzlefrazzle99

Oh interesting, thank you! So all good to lease a computer even though it's a company and sole trader? I definitely need to hire an accountant soon!

It's actually the opposite for me, my personal computer is too bog standard and I need something that can edit video for work!

TheCyclingProgrammer

HMRC will generally accept that personal use of a company provided asset or service (e.g. a laptop) is "not significant" when it can be shown that the asset is essential for the employee (or director) to do their job.

This could be the case regardless of how much the asset is used for non-business purposes, so long as the sole purpose of buying the asset was to enable you to do your job. It would be hard to prove other wise unless, as Pennywise says, you're doing something like buying a top-end gaming rig when you only need it to do admin - HMRC might have a good case to make then that it wasn't bought wholly and exclusively for you to be able to do your job.

HMRC technical guidance on this is here:
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21611

Note that the above rules are for supplies and services "other than on the employers premises". There are separate (but similar) rules for "on the employers premises". I've always wondered which of these rules HMRC would apply where the employers premises and the employees home are one and the same - probably whichever is favourable to them!

"Not significant use for private purposes" is covered here:
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21613