Can I expense a laptop through the business?

The short answer:

Yes, you can buy and expense a laptop through your limited company to help lower your tax bill, but there are some rules that you should be aware of. 

The laptop must be used for business purposes only: 

If you purchase a laptop through your company, it must be used solely for business purposes. Any personal use must be purely ‘incidental’ or ‘insignificant’.

If there is significant personal use and you were investigated by HMRC, they may consider that the laptop has a duality of purpose, and you could pay a benefit-in-kind tax on the laptop’s value. 

The cost of the laptop is tax deductible:

Provided that the laptop is for business purposes only, the cost of the laptop is 100% tax deductible expense for your business. 

This means that you can claim the cost of the laptop as an allowable expense against your company's taxable profits, lowering the amount of corporation tax that your company has to pay.

Let’s break it down

This may sound confusing, so let’s put some realistic numbers on it. 

As an example, if you currently have company profits of £10,000 at a 19% corporation tax, you would pay £1,900 in tax. 

However if you buy a laptop for £2,000 that’s for business purposes only, as established above, it’s a fully tax deductible expense. 

That means you can deduct the full cost of the laptop from your company profits to calculate the tax you owe. 

This reduces your pre-tax profits to £8,000. At a 19% corporation tax rate, you would pay £1,520 in tax.

Let's compare before and after buying the laptop: 

Before buying the laptop you would py: £1,900 of tax

After buying the laptop you would pay: £1,520 of tax

You have lowered your tax bill by £380. Effectively a £2,000 laptop only costs you £1,620 once the tax savings are factored. 

Cool right?! And it's perfectly legal provided the conditions above are met.