£2k flat rate vat rule

[xchaotic]

I am in dire need of a new laptop and currently eyeing the new MBPs.
An up-specced 15" model can easily be >£2000.
I am on flat rate.
If I understand this correctly, from a model costing £2100, I can recover £410 in VAT, I would be able to otherwise.
It is also a major expense, reducing my ltd CT liabilities etc.
But assuming I would be spending ca £1500 on a laptop + accessories anyway, it seems like a no-brainer to upgrade a little and effectively get better HW for the same price.
Am I interpreting this HMRC legislation wrong in any way?

[Craig@Clarity]

If your new equipment is more than £2,000 inclusive of VAT then you can claim the VAT back on it. So if your laptop/computer was £2,100 in total, then you can claim the £350 VAT back. If it is £2,100 plus VAT, then you can claim the £420 VAT back. You'll also get CT relief from the cost of the equipment.

[TheFaQQer]

I am in dire need of a new laptop and currently eyeing the new MBPs.
An up-specced 15" model can easily be >£2000.
I am on flat rate.
If I understand this correctly, from a model costing £2100, I can recover £410 in VAT, I would be able to otherwise.
It is also a major expense, reducing my ltd CT liabilities etc.
But assuming I would be spending ca £1500 on a laptop + accessories anyway, it seems like a no-brainer to upgrade a little and effectively get better HW for the same price.
Am I interpreting this HMRC legislation wrong in any way?

If the total bill comes to over £2000 then you can claim it. So, if you bought a £1500 laptop and £501 of accessories on the same invoice, then you can claim the VAT back.

[xchaotic]

Thank you both, that part is more or less clear, what I'm trying to understand is whether I am really better off spending a little bit more and it look like I am indeed?
Where's the catch?

[kaiser78]

I am in dire need of a new laptop and currently eyeing the new MBPs.
An up-specced 15" model can easily be >£2000.
I am on flat rate.
If I understand this correctly, from a model costing £2100, I can recover £410 in VAT, I would be able to otherwise.
It is also a major expense, reducing my ltd CT liabilities etc.
But assuming I would be spending ca £1500 on a laptop + accessories anyway, it seems like a no-brainer to upgrade a little and effectively get better HW for the same price.
Am I interpreting this HMRC legislation wrong in any way?

Do you mean being on the flat rate VAT scheme ?

[Wanderer]

Where's the catch?

If you spend over £2000 to deliberately avoid paying VAT then you will be a filthy, dirty tax avoider and HMRC "don't like it" when people don't pay their "fair" share of tax.

Other than that, I can't see that there is any problem so go for it!

[malvolio]

If the total bill comes to over £2000 then you can claim it. So, if you bought a £1500 laptop and £501 of accessories on the same invoice, then you can claim the VAT back.

NO YOU CAN'T. It applies to single purchases only, i.e. one invoice for one deliverable item. Aggregating separate items doesn't count even if all billed together.

So a laptop built to a given spec using additional components would be OK, but a laptop plus docking station, printer and NAS wouldn't be.

[TykeMerc]

NO YOU CAN'T. It applies to single purchases only, i.e. one invoice for one deliverable item. Aggregating separate items doesn't count even if all billed together.

So a laptop built to a given spec using additional components would be OK, but a laptop plus docking station, printer and NAS wouldn't be.

That's my understanding too, I'd be prepared to accept that I'm wrong as I've not checked with the accountant.

[Clare@InTouch]

According to HMRC:

•It must be a single purchase of capital goods with a VAT-inclusive price of £2,000 or more. That doesn't mean you are restricted to claiming back the VAT on a single item - for example, you could buy a pizza oven, fridge and dishwasher, as long as you buy them at the same time from the same supplier and the price is more than £2,000 including VAT.

•You can't claim back VAT on goods that you intend to use up (consume) within a year.

HM Revenue & Customs: Flat Rate Scheme for VAT

In my view that means you can buy a package deal that includes various items, but you cannot just buy a lot of little things that would usually be consumables (and written off to the P&L) just to make it £2,000.

[Scrag Meister]

NO YOU CAN'T. It applies to single purchases only, i.e. one invoice for one deliverable item. Aggregating separate items doesn't count even if all billed together.

So a laptop built to a given spec using additional components would be OK, but a laptop plus docking station, printer and NAS wouldn't be.

Edit : Just saw Claires post, my thinking too

Malvolio, read the second link.

I build my desktops and buy a shed load of components from 1 supplier, I would claim all VAT even if it is made up of 10-15 bits and pieces, as the capital item is the finished product. 1 invoice is a single purchase irrespective of the number of items.

"You make a single purchase of capital expenditure goods of more than £2,000 in value, including VAT. You must deal with purchases of capital expenditure goods of more than £2,000 outside the Flat Rate Scheme. So, you can reclaim the VAT you paid on them"

HMRC Link


"It must be a single purchase of capital goods with a VAT-inclusive price of £2,000 or more. That doesn't mean you are restricted to claiming back the VAT on a single item - for example, you could buy a pizza oven, fridge and dishwasher, as long as you buy them at the same time from the same supplier and the price is more than £2,000 including VAT."

Another HMRC link (more detail)

Also when I started out as a contractor I bought 2 laptops on 1 invoice from Dell and was told by my accountant that I could claim all the VAT back.