In the age of home offices and versatile workspaces, business owners often look to optimise their environments with equipment that serves multiple purposes.
A common query that arises among freelancers, contractors, and company directors is: "Can I expense a TV through my company?"
While the prospect of having a shiny new television at the company's expense sounds alluring, the rules surrounding such claims can be intricate. Let's delve into the specifics to determine under what circumstances a TV can be a legitimate business expense.
The golden rule for expensing any item through your company is that it must be "wholly and exclusively" for the purposes of business.
This is relatively easy to prove if you’re buying a TV for a meeting room, waiting area or for trade shows. It’s very common to need a screen to present to clients, showcase your portfolio, or conduct team meetings, so a TV can undoubtedly be a justifiable expense.
However, if you intend to use the TV at home, even if it’s in a home office, this may give rise to a duality of purpose.
If the TV will also serve a personal purpose, such as catching up on the latest Netflix series after office hours, then it becomes a dual-purpose item. Typically, HMRC doesn't allow expenses claims on dual-purpose items.
If you work from home and plan to use the TV "wholly and exclusively" for the purposes of business, you can expense it through the business.
You should however be able to fully substantiate why you need the TV for business and have a good reason for why you bought a TV and not a monitor (which are generally accepted as a wholly necessary business expense). See the bottom of this article for more information on this.
If you're VAT registered, you might be thinking of reclaiming the VAT on the TV purchase. But remember, you can only reclaim VAT if the TV is used exclusively for business. Any personal use complicates the claim, potentially making it invalid.
If there's personal use of the TV and the company pays for it, this could be seen as a benefit to you. This might result in a taxable benefit-in-kind, which could lead to additional tax and National Insurance contributions. Ensure you're aware of the potential implications before making the purchase.
A TV is considered a tangible asset for the company. This means it can be depreciated over its useful life. Depending on your accounting method, you might be able to claim something called the annual investment allowance (AIA), further reducing your tax. Mighty will do this automatically for you if you're a customer.
If you've purchased a TV personally and now want to introduce it to your business, you can transfer it to the company. The transaction should be at its current market value, and the same rules of business use apply.
Adding a TV as asset in Mighty is easy.
Monitors are widely accepted as necessary for many jobs with limited scope for ‘duality of purpose’. This generally makes them allowable to be expensed through a company, in turn saving you tax.
There is no rule for how big a monitor can be or how many you can have... You may choose to have a small travel monitor and a bigger monitor for when you're working from home and/or your office.
If you work in a creative industry, there may also be a strong argument that you need a high resolution monitor to get the colours correct, so there is no firm upper price bound on what you can spend.
Important: If you intend to use the monitor for non-business purposes (such as streaming Netflix etc), the same rules of ‘duality of purpose’ apply as when buying a TV. It is generally not allowable to be bought through the company.
Expensing a TV through your company comes down to its purpose. If it's for business use, you're on solid ground. However, the waters get murky with personal use.
If you’re a Mighty customer and in doubt, you can always ask us free of charge and we’ll be happy to help.