Guide: How to Claim Laptops as Business Expenses

8th August 2023

Claiming laptops as business expenses can offer significant financial benefits for businesses.

Companies should be claiming equipment such as computer hardware as an expense on their taxes, as you should for the majority of equipment and stationery that go into running the business and are only for business use.

For freelancers and smaller or newer businesses, the rules around expenses can be confusing because there are exceptions, for example, training programmes to improve work skills that you normally would not claim as an expense.

However, in terms of computer devices used solely for business purposes, it makes complete sense that it would be claimed as an expense. This has many advantages for freelancers and larger businesses alike.

Not only does it help in reducing tax liabilities, but it also enables individuals and organisations to stay competitive in an increasingly digital world.

But how should companies claim their laptops as business expenses and is this process different if you’re a freelancer, small business, or larger company?

The simple answer is yes, there are some differences depending on your business size and profits. There is also a difference if you lease your computer equipment compared to buying it outright. In fact, there are tax benefits when it comes to leasing business laptops rather than buying them.

Let’s take a look at a couple of guides for how sole traders and larger companies would claim laptops as business expenses on their tax self-assessment in the UK.

Claiming Laptops as Business Expenses for Freelancers

Claiming a laptop as a business expense is straightforward for sole traders, especially if you choose to keep your business and personal devices separate.

Even if you do use your equipment for personal use, you can still claim some of the cost of the hardware as an expense on your tax self-assessment.

If you use your device substantially, for both business and personal use, then you can estimate what percent you use for business, for example perhaps 70% of its use is business orientated. You would, therefore, claim 70% of the cost as an expense.

The process of claiming a laptop as a business expense involves a few straightforward steps. Follow this guide to ensure a smooth tax filing experience:

1) Keep Accurate Records Of Business Purchases: It’s crucial to maintain detailed records of your laptop purchase, including receipts, invoices, insurance, any extra products, or software purchased with the business laptop, and warranty information. These records serve as evidence to support your claim if it were to be investigated or checked by HMRC.

2) Determine Your Eligibility: To claim a laptop as a business expense, it must be used solely or predominantly for business purposes. HM Revenue and Customs (HMRC) guidelines state that if a laptop is used for both personal and business use, you can only claim the portion that is directly related to your business activities.

3) Calculate Allowable Deductions: If your annual business turnover is less than £85,000, you can use the simplified form on your self-assessment tax returns to enter the total amount of expenses, including any computer hardware. However, larger companies and any sole traders making over £85,000 per annum will need to go about the process differently. In this case, a laptop is viewed as a capital asset if you bought it outright. The cost can, therefore, not be deducted within one single tax year. You can, instead, claim the AIA (Annual Investment Allowance. This lets you deduct the full cost of qualifying assets such as laptops up to a specified limit. 

4) Include the Expense on Your Tax Return: When filling out your tax self-assessment form, include the cost of the laptop as a business expense in the appropriate section. Provide the necessary details, including the purchase date, item description, and the portion of business use if/when prompted.

Bulk Claiming Laptops for Staff As Business Expenses in Companies

For larger businesses, claiming laptops as business expenses for staff members requires a slightly different approach because it is considered a capital asset.

1) Establish Eligibility Criteria: Determine the criteria that define which staff members are eligible for the laptop expense claim. Typically, employees who require laptops for business purposes are included.

2) Document the Need: Maintain clear documentation that justifies the business necessity of providing laptops to employees. This may include job descriptions, project requirements, or any other relevant information. Remember, even if they have personal computers, there is still good reason to provide laptops for your WFH staff. Using separate devices for work and personal use makes tax expenses eligibility clearer and it enhances business security. It ensures there is less chance of data breaches and gives staff the right protection and functionality of a business device that you can control via MDM software. Hardsoft’s Shepherd MDM can make managing your flock of digital devices simple even in workers’ homes. It can let you see how staff use your hardware and you can even define how they use it through digital policies.

3) Ensure Compliance: Always familiarise yourself with HMRC’s current laws and recheck every year as regulations on tax can change.  You must meet up-to-date criteria.

4) Recordkeeping: Keep detailed records of each laptop purchase or lease, including receipts, invoices, and employee assignment information. These records will serve as evidence in case of any future audits.

Tax Benefits Of Leasing Computer Equipment For Businesses

As you can probably glean from the above, those businesses making over £85,000 a year have a more complex process in claiming laptops for their staff. Sole traders and businesses making less than this threshold can only claim for the equipment once.

However, if you choose to lease your computer equipment rather than buy it, then you could reap tax benefits. In the case of several types of computer lease, especially DaaS (Device as a Service) style leases, the hardware is considered an operating expense instead of a capital asset. This means you can continually claim your monthly leasing bill as an expense. You would continually be able to benefit from that tax relief. It doesn’t reduce the amount of tax you pay but spreads the tax relief over a longer period.

In conclusion, if you are a business in the UK, whether a sole trader or a larger organisation, you will have significant benefits by correctly claiming laptops as business expenses. These advantages go even further when you lease your hardware instead of buying it.

Remember, it is always advisable to consult with a qualified tax professional or accountant to ensure compliance and maximise your tax benefits.

By utilising Hardsoft’s Device For Teams DaaS leasing solution, businesses can reap the tax benefits and utilise additional IT services to make life easier. Products like Hardsoft’s Boomerang make it easy to remotely configure hardware to each employee’s requirements, deploy the hardware to their home 100% set up and ready to go, and then retrieve and repurpose devices for the next hire when they leave the company.