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but if they aren’t bought, or cheaper ones are bought, there’s more left over for the good of the country
Not that simple
I know, I’m assuming that’s the OPs thinking.
I read somewhere that for every £1 extra that was directed to HMRC's budget, it would result in a gain of £6.40 in tax revenue?
I wonder why the Conservatives didn't do this to avoid having to make unnecessary cuts?
I don't have a problem with people having upgraded tools to do their job, if they need a computer then I don't think it's practical to judge what level they may need from the outside. However we all know of "small businessmen" who absolutely take the piss and put things that are nothing to do with their business through the business.
if you want to see real excess in this world, take a look at low-end motorsport sponsorship. There's no way there's any money to be made back by sticking a "daves lawyers" sticker on the back of a group 4 911 (cost to run has to be 6 figures per year), yet somehow that's exactly what happens and Dave happens to be the team driver too..
I read somewhere that for every £1 extra that was directed to HMRC’s budget, it would result in a gain of £6.40 in tax revenue?
I imagine that only works up to a point eg high gain multiple for low hanging fruit, then it will tail off rapidly.
Since our local bank closed I simply must have an emtb to get to the nearest one.
We'd live in a better world if all businesses used ebikes (of any description) rather than cars to do their banking and post office runs and pick up those rolls of toilet paper described above, or deliver sandwiches around the trading estate...
Finally a business who owns and operates quite a bit of plant and machinery to do their work. The owner loves having and using all this kit.
Do they?
You see the occasional self employed haulier in an OTT HGV tractor, but I've never seen a digger driver turn up to site with anything other than the bare minimum they could hire for the task.
The rest ..... mehh.
Macbooks, most companies aren't all that IT literate, mac's and iCloud solve you all sorts of dropbox, onedrive, sharepoint and office server related pain,
Vans with optional extras, my boss had to be very apologetic when asking anyone to take the poverty spec transit on a job, the one with no AC, bluetooth and the asthmatic engine. It definitely cost him more in receipts for supersized cokes at service stations in the long run, and I'd turn up to clients in the summer with BO so bad even I could smell it.
Pricey Pickup truck, maybe/probably he's using it for personal use too, and there is a bit of a loophole there where you only have to pay a flat rate of BIK (£6k?) if it's a commercial vehicle. Whereas if they bought an estate car they would pay a lot more. This explains why "commercial" spec LR Discoveries are the biggest seller in their class, because there's an entire industry set up around them to retrofit with leather seats and electric windows etc. You can usually spot them as they often still have black wing mirrors and other bits of trim where the "car" version has body coloured panels there. At that level it's a loophole, at your average builder using the work van to drive to a trail center, then as long as they're accounting for the fuel it's just an allowance that the BIK of driving a van, however many options you tick, is no better than a poverty spec hatchback for most people despite the £50k list price, so it's a case of paying BIK at poverty spec hatchback rates, or pay yourself, pay tax and then buy a poverty spec hatchback which nets roughly the same tax.
We’d live in a better world if all businesses used ebikes (of any description) rather than cars to do their banking and post office runs and pick up those rolls of toilet paper described above, or deliver sandwiches around the trading estate…
I saw a UPS one yesterday on a cycle path in Cambridge!
if you want to see real excess in this world, take a look at low-end motorsport sponsorship. There’s no way there’s any money to be made back by sticking a “daves lawyers” sticker on the back of a group 4 911 (cost to run has to be 6 figures per year), yet somehow that’s exactly what happens and Dave happens to be the team driver too..
I believe the lower echelons of Formula 1 used to be much the same too. Although at a different order of magnitude.
I’m happier they are spending money rather than hoarding it as that’s what makes an economy.
Can you send me £50 instead of hoarding it?
if it looks like you are going to make a profit and therefore pay corporation tax, you can reduce that by buying stuff like Macbook Pros, and what will serve the business better? Paying more to HMRC or having some decent new laptops?
It is not a good thing to reduce profits by buying unnecessary crap, even if that reduces the amount of corporation tax payable.
So its not as simple as the money is lost, it just circulates via a different path.
Tax revenue is immediately spent in the UK (apart from interest repayment, which tbf could go anywhere) overwhelmingly for the benefit of UK people (despite the best efforts of our current government) - pensions, benefits, schools, hospitals, roads and other tedious but very desirable stuff.
https://obr.uk/forecasts-in-depth/brief-guides-and-explainers/public-finances
Money spent on Apple stuff goes to Taiwanese assembly plants and Apple shareholders via fifteen offshore companies, mysteriously none of which end up paying much tax at all.
It's totally mad to suggest that money spent on crap consumption is just as good as money spent on tax. Keynesian Demand Management doesn't mean "spending money somewhere is as good spending money anywhere".
It’s totally mad to suggest that money spent on crap consumption is just as good as money spent on tax.
Just as well no one did and you made that phrase up...
Money spent on Apple stuff goes to Taiwanese assembly plants and Apple shareholders via fifteen offshore companies, mysteriously none of which end up paying much tax at all.
For any of you business owners looking to put some of your Apple business (necessary or otherwise) through a UK company, paying UK tax, give me a shout 😉
Save your anger for the mega corps like Amazon, making billions and paying virtually no tax
Save your anger for the mega corps like Amazon, making billions and paying virtually no tax
What ? Not when it’s easier to go after the "small man" business owners. The country is going to hell in a handcart and its all their fault, because they didn't want to give a bigger share of their profits to the **** in charge to spaff up the wall 😉
I think we should all watch this:
https://www.amazon.co.uk/Britains-Trillion-Pound-Paradise-Inside/dp/B07R7Y87PS
Lower quality version here if you don't have amazon prime 😉
Check out how Facebook operate at 26mins in.
Well this thread took off! Some good points being made and questions asked, which I'll try to catch up with.
What?
I think OPs issue is that businesses pay tax based on the profit they make, so if they fritter all that profit on MacBooks and posh pickups, that’s less profit to be taxed.
Yes, some of them with some of it. Thought my first sentence was clear but could have been better.
You need to look at the cost of ownership across the life of the equipment. A decent business-class laptop (either Windows or Mac) will run fine for ten years and not constantly annoy you with freezing under load like really cheap stuff does. When you’re busy, you don’t want to be losing time because you tried to cheap out on your laptop. Also, if you have to haul it around town, something light and with good battery life will save you a ton of misery.
I can see that better / more reliable kit is clearly justified expenditure, how many professional tradesmen use B&Q own brand power tools vs DeWalt and Makita
I agree, but I'm talking about buying luxury (£2k laptop) instead of professional quality (£1k) - not about cheaping out (£300).
But a lot is just image and creating the ‘experience’ – on the industrial estate near me there’s a Jaguar showroom that has plush leather all round, posh coffee, etc., just down the same road is a used car trader on a gravel forecourt with a portacabin as office. They both sell cars in the end.
Yes, not the type of unnecessary I had in mind.
When we ran our old business we’d also stay in decent hotels – are you saying we should’ve stayed in cheap (shit) ones instead?
No, just that you shouldn't be staying at the Ritz.
OP Smacks of jealousy if you ask me.
No, I think it's ok to have a conversation about potential injustices in contributions to the public purse, at a time when there are people struggling on both the paying and receiving end of it.
if you want to see real excess in this world, take a look at low-end motorsport sponsorship
That’s nothing compared to private jet ownership. Have it operated by a charter aviation company & a contract that it’s “available” for 3rd party hire to save VAT. But every time there is a possible charter, “oh the owner was thinking of flying that day” so it can be hired out!
I’m talking about buying luxury (£2k laptop) instead of professional quality (£1k) – not about cheaping out (£300).
I think it's entirely up to the business owners (or by proxy the managers they appoint etc) how they value the morale and productivity of their employees.
‘Professional quality’ laptops rather depend on the profession. Some need a £10k monster, others a £160 paperweight. Whisper it, but sometimes Apples really are the best thing for the job. (I should say, I’m not an Apple sales person, they’re just one manufacturer of hundreds we sell.)
HMRC barely have the resources to resolve large-scale fraud – there’s no way they can catch hundreds of thousands of people skimming off the top. Loads of businesses furloughed employees during covid, then made them work like normal. How long do you think it would take to get through that lot and prove it? Then how long to actually get the money back?
I realise much of it would be hard or a net negative gain to the treasury, yes, at least with they way things work now.
Either in extreme is potentially destructive and if done in an uncontrolled manner without the right financial assessments you’re fairly likely to be seeing someone like me professionally at some point to work out what’s got to be done with the broken shell of the business.
Great response (all of it).
So who should make the decision of what is the correct level of car / coffee / sofa / board room table?
I'm sure as a society we'd be capable of working that one out. We've done it for loads of other allowances and claimable expenses etc.
When they spend this money it is gone.
If they kept the money some of it would have gone to the taxman and some to their pocket, but they chose to spend it, not keep it.
When they spend this money, it pays the wages of whoever they bought it off, and they will pay some tax and buy things of someone else who will pay some tax.
I’m happier they are spending money rather than hoarding it as that’s what makes an economy.
This seems like different, much broader debate.
Are businesses not allowed to have nice stuff comrade?
I bought a fancy coffee machine through the business, it was entirely necessary for productivity.
Re: hiding profit, if it looks like you are going to make a profit and therefore pay corporation tax, you can reduce that by buying stuff like Macbook Pros, and what will serve the business better? Paying more to HMRC or having some decent new laptops?
Of course you are. I'm not talking about your coffee machine unless it was thousands of pounds.
It would serve the business and society better to spend £1k on business class laptops and make £1k of taxable profit with the change from a top of the line Macbook Pro.
‘Professional quality’ laptops rather depend on the profession. Some need a £10k monster, others a £160 paperweight. Whisper it, but sometimes Apples really are the best thing for the job. (I should say, I’m not an Apple sales person, they’re just one manufacturer of hundreds we sell.)
Yes, this is why I specified a job that definitely doesn't need anything special.
What a strange thing to query!
It’s not just businesses, you could apply your questions to almost everything in life – why have a sofa when you could sit on the floor, why should a single person have a double bed, etc, etc.!!
Missing the point. Having somewhere to sit other than the floor isn't a luxury.
The owner loves having and using all this kit.
I’m sorry, your point is?
That he is spending tax-free money for his personal satisfaction and enjoyment, with no business need.
I don’t have a problem with people having upgraded tools to do their job, if they need a computer then I don’t think it’s practical to judge what level they may need from the outside.
Agreed on both counts. You'd need something like cross-auditing done by similar companies, gets laborious, complicated, and open to abuse.
Save your anger for the mega corps like Amazon, making billions and paying virtually no tax
Good point, but there's plenty of anger to go round. Plus I think we're more inclined to be annoyed with visible things we can relate to than some big numbers on the news about Amazon.
My last two bikes were bought via my business. My vans, too. Plus all my tools.
TBF, I did used to work self employed as a bike guide till 2016 so the MTB WAS fair enough. I used my gravel bike to commute 15km each way on.
Both vans have been converted to campers, but I got round that saying it saved me booking a hotel when away on a job. Also meant I could deduct the expense of both items, materials and my time whilst converting.
I could have bought Einhell tools, but honestly no self respecting tradey is going to do that. Festool and Makita all the way.
Did used to buy tools, hang on to them for a year before flogging second hand (without box in the case of Festool). I bought six track saws, seven Makita drills and four SDS drills over the last eight years. If taxman asked you say the item was broken, stolen or lost.
Every time we went out for a meal or drinks I would keep the receipt. Surprising number of "Akuise" or "Besprechung" nights out.
So I feel guilty about it? Do I F....
I used to pay more corporation tax in Munich each year than BMW who used to pay zero.
Same as I don't feel guilty when doing a job for cash. Ultimately I'm going to spend that money and it'll go back into the economy.
There are so many folks twisting the system to suit themselves, you'd be a fool not to do the same.
One gut I built a terrace for last year had five cars, one for him, one for his missus and I've for each of the kids all registered at his surgery. He wanted an invoice for the job, but wanted it saying that we had built some wardrobes for the flats above his surgery so that he could deduct that against his tax. We declined and agreed we would drop 3% off our price if he paid cash.
Just for some balance, I actually went to CEX and bought some ram for my work computer, because it just couldn't do what I needed it to, 4gb to 16GB as I have multiple browsers and teams and Office open at the same time, not to mention a couple of remote desktops open. oh and multiple slack sessions too. An sharepoint, and god knows what else, all the cooperate bullshit that you have to have running.
I'd asked for an upgrade previously but IT basically told me to sod off as it was not needed.
It was £15 very well spent for my sanity, but even better spent when when IT did an audit and couldn't figure out how I was running an i3 with 16gb...as their audit spreadsheet obviously said it's wrong and impossible.
It would serve the business and society better to spend £1k on business class laptops and make £1k of taxable profit with the change from a top of the line Macbook Pro.
You're telling me what is best for my business based on......some fart you just did? Or is there some substance to your claim? You have no idea what I do, how I do it, nor what equipment is most efficient and appropriate for me. You're just blowing out your arse.
Honestly, I'm surprised we've got this far and no-one's mentioned the people actually making the rules who are sticking maintenance costs for the moat on their second home on expenses. A Macbook is small apples in comparison.
I'm away with work just now. I'm in a scabby Travelodge somewhere in Southwark, it's over £200 a night and the lazy bastards - I've just discovered - don't even service the room unless you request a "top-up." Expenses are relative.
I'm also reflecting: last year I was part of a global gathering of charities in Salzburg. We stayed in a rather nice hotel, fully catered, with a private piano recital, resident artist, private tours of the house (sound of music was filmed there) and all sorts of niceties for 6 days.
That was very luxurious, and arguably a Premier Inn was more appropriate...
I'm back for another 5 days this autumn too.
So dob me in...
The idea that it's somehow wrong for business to treat their staff with anything more than the barest minimum of decency....it's just bizarre. Where could such an idiotic notion have come from?
They might make more money for a month if they did. They might lose their best staff next.
You might as well argue that they shouldn't pay more than the minimum wage also, to all staff. It would be a similar level of idiocy.
You’re telling me what is best for my business based on……some fart you just did? Or is there some substance to your claim? You have no idea what I do, how I do it, nor what equipment is most efficient and appropriate for me. You’re just blowing out your arse.
I wasn't telling you specifically anything. I was providing an example to illustrate the point that in some cases it's very obvious that someone is buying themselves an extravagant treat tax-free.
The idea that it’s somehow wrong for business to treat their staff with anything more than the barest minimum of decency….it’s just bizarre. Where could such an idiotic notion have come from?
Agreed. That's not my opinion and I haven't criticised anyone for doing that.
The idea that it’s somehow wrong for business to treat their staff with anything more than the barest minimum of decency….it’s just bizarre. Where could such an idiotic notion have come from?
They might make more money for a month if they did. They might lose their best staff next.
You might as well argue that they shouldn’t pay more than the minimum wage also, to all staff. It would be a similar level of idiocy.
They’ll all be quiet quitting by the end of the week
No, I think it’s ok to have a conversation about potential injustices in contributions to the public purse, at a time when there are people struggling on both the paying and receiving end of it
Apologies @bikesandboots, I was just taking the piss really, but it was early. Maybe I should have added a winky face or something.
I think I’m on something like my 14th mouse in 8 years ( pc not the vermin type).
I used to buy £10 cheapies, then decided about 18 months ago to buy a super duper £100 gaming mouse and it’s still going strong. Luxury price for a mere mouse , but I’ve spent more on the cheapies in total .
(Cad drafting 10-12 hours a day clicking buttons all day long tends to kill them )
I think I’m on something like my 14th mouse in 8 years ( pc not the vermin type).
I used to buy £10 cheapies, then decided about 18 months ago to buy a super duper £100 gaming mouse and it’s still going strong. Luxury price for a mere mouse , but I’ve spent more on the cheapies in total .
(Cad drafting 10-12 hours a day clicking buttons all day long tends to kill them
This is an excellent example.
I have a logitec mx518 mouse, it must be at least 15 years old now.
To paraphrase Gandalf, "He's the lord of all mice, and he's been my friend through many dangers."
I don't know what the hell I'm going to do if/when it packs in, probably buy the reimagined 'legendary' version, but they are about £80 which is frankly stupid money, the origeonals were only about £40.
Couple of further comments from me...
Half these nice things (well most of them) are probably on the never never (HP, lease, contract hire etc). The days of owning company cars and machinery outright are long gone with the explosion in asset based finance in the UK since the late 90s.
Also if you buy a £100k SUV you don't get an immediate deduction against current year revenue for tax but you're getting a part of its cost allowed each year (depending on how it is financed or hired that amount may be different). The user and the company are potentially paying extra employment taxes especially if it's a high CO2, high value status symbol type compared to a tiny eco car.
Same with bigger plant and equipment - you get allowed part of its value each year against tax over time not the headline price.
Edit... I forgot to say a lot of this is timing differences and ultimately you would get the relief over a period.
There is or was special rules about IT equipment.
Hence the buying shiny goods to reduce taxes is more nuanced than immediate savings.
A few seeming extravagances may make a nicer workplace and enhance profits. Unrestrained greed and lack of control or Scrooge style penny pinching will ultimately lead to trouble.
(Cad drafting 10-12 hours a day clicking buttons all day long tends to kill them )
Thread diversion but I do a lot of screenwork (not like CAD levels of clicking though) and have just gone to an upright mouse so your hand is rotated 90deg compared to a conventional mouse.
It's an insanely better design imo for prolonged use. Seems to stop that bunched up feeling I've always had with a normal mouse.
I think I’m on something like my 14th mouse in 8 years ( pc not the vermin type).
I used to buy £10 cheapies, then decided about 18 months ago to buy a super duper £100 gaming mouse and it’s still going strong. Luxury price for a mere mouse , but I’ve spent more on the cheapies in total .
(Cad drafting 10-12 hours a day clicking buttons all day long tends to kill them )
This is an excellent example.
Well worth it, like a tradesman buying a Makita drill instead of a B&Q own brand. But not the extravagant luxury this debate is about.
Also if you buy a £100k SUV you don’t get an immediate deduction against current year revenue for tax
you can claim the full value against corporation tax in the first year if it’s an EV 😉
Thread diversion but I do a lot of screenwork (not like CAD levels of clicking though) and have just gone to an upright mouse so your hand is rotated 90deg compared to a conventional mouse.
It’s an insanely better design imo for prolonged use. Seems to stop that bunched up feeling I’ve always had with a normal mouse.
I did borrow one to try , but I just couldn’t get on with it (20+ years of muscle memory I guess)
you can claim the full value against corporation tax in the first year if it’s an EV 😉
Yes fair point I'm too late to insert the words "fire breathing petrol" in front of SUV but in my head that's what I was thinking of.
But not the extravagant luxury this debate is about.
does my £4k laptop qualify me for this 😉
does my £4k laptop qualify me for this
Anyone who spends 4k on a laptop should do this with it:
You say extravagant luxury but what makes you think a business might not just be making enough profit?
Like, owner is happy with what they're making and just wants it to be a nice place to work.
I'd say a macbook falls nicely into that category even if I wouldnt have one myself. If it was the owner decking out a £6k gaming rig whilst the staff got by on 10yo second hand netbooks I could see your point but that's not what you're saying.
I agree, I'd never buy a mac book pro just because I belive super powerfull laptops are pointless when you take into account the price and the battery power if you want to do serious computing on it, you just dial into a bigger computer if you need that. Laptops are all about portability.
Like a half way house between a mobile phone and a real computer.
Equaly, a £350/400 laptop is going to be utter garbage, but they are quite usefull when traveling. But they will also have crap screens and low storage and other compromises, because they are only £350-400, rather than a thousand.
Yes - I'm finding this notion of dictating "no more than minimum requirement" to be depressingly soviet.
The idea that it’s somehow wrong for business to treat their staff with anything more than the barest minimum of decency….it’s just bizarre.
Also, the things you are describing as "luxuries" are really not. Most of the examples you have given are well within the realms of justification - maybe you just don't understand their business. Macbook pro vs cheapo chromebook? Have you not seen the levels of photoshopping estate agents do?
My boss recently wanted to send me to Mumbai for a one day meeting: 16 hours each way, there and back within a working week. Oh and sorry - it's going to be economy, we can't get approval for any business class at the moment. Where does that sit on your scale? Should I have travelled economy - arrived in a pissed-off, sweaty heap and done a terrible job at the meeting? Or was the "luxury" of business class justified in your opinion? To what degree do you think an economy-only travel policy affects retention in my industry? The point is - you don't know, and nor does the tax office. The people who know are the ones running the business.
I don't completely disagree with you - I'm sure that sometimes small business owners buy stuff that is unnecessarily nice/good to perform the required task. Maybe that's a bad procurement decision, or maybe it's to keep their staff happy and improve retention - or yes, maybe it's some nefarious scheme to screw the UK public out of a few quid. unless you are going to task the tax office with delving this deep into how people run their businesses - you're never going to know.
As has been mentioned above, amongst the worst offenders for this kind of thing are MPs - who seem to be able to claim their houses (along with furniture and running expenses) as business expenses ie: not just tax deductable - they are claiming the full amount from the public purse, and who seem the be able to employ wives/children on their staff. Never mind Bojo who's just gifted a random selection of misfits a job for life at an extortionate salary and a gold plated pension.
Or what about the hilarious ironic (in this context) procurement decisions by the government to buy literal tons of PPE that was insufficiently spec'd for the required task, and had to be binned. That wasn't even just a tax fiddle - that was large scale, blatant corruption. Are we going after that money?
Sorry - I'm irrationally annoyed at this line of discussion. the UK at the moment is spiraling to the bottom in terms of quality of life for "normal" people. This narrative that somehow it could be resolved/improved by people tightening their belts, holding their nerve, subsisting on plain tesco-value pasta shells, or by self employed builders buying econoline transit vans instead of ones with mudflaps and A/C - rather than the political classes (particularly tories) choosing to prioritize the needs of the population over their own grubby self interest.... really pisses me off.
I know that's not what your point is - but it's certainly adjacent to it.
If you are concerned about tax evasion/avoidance and it's impact on society - you are starting at exactly the wrong end of the list.