Freelancers' Questions: Can I expense an iMac?
Freelancer’s Question: I had to purchase a new Apple iMac in the first week of January for my sole trader business. How much of the item’s significant price tag can I expense? I use it for work and for home-life too, so assume I can claim 50% off my tax assessment. Is that right?
Also, I currently have a software subscription which I pay a monthly fee on one device to use. I pay out of personal funds because it’s quite a small amount but I now need to extend the subscription to two devices, which is costlier. So how do I claim the two-device subscription cost? And should I claim retrospectively for the software I used last year which I paid out of my own pocket? I won’t if it will attract suspicion from HMRC.
Expert’s Answer: If you're a sole trader and if you use your computer 50% for business and 50% for private use, then yes, it would be correct to claim 50% of the cost of the computer as capital allowances.
These don't count as a day-to-day running cost of the business, but instead, you'd put them on your tax return after working out your business's profits, and so reduce the amount of profit your business pays tax on.
The 50% split would be appropriate if that's how much you use your computer for business -- if, for example, you use your computer 60% for business and 40% for personal use, you would include 60% of the computer's cost as capital allowances.
For the software, you could include the second device's payment in the same way as the first. If you want to revise your previous year's tax return, you would need to file an amended form to HMRC, like this https://www.gov.uk/self-assessment-tax-returns/corrections. Good luck!
The expert was Emily Coltman, chief accountant at FreeAgent, an accounting platform for freelancers and the self-employed.
17th January 2019