BENEFITS - 27.10.2005

Owzatt for a tax deduction!

Office watching. The conflict between coming to work and staying at home to watch “the match”, was resolved by some employers (during the Ashes series this summer) bringing a portable TV into the office. It wasn’t a perfect solution but as least some work got done on the day. Our question is, if you replace that ancient 14-inch portable with a state of the art 42-inch digital plasma TV could you get a tax deduction for it?

Rule of thumb. If you can make a case for an asset being wholly and exclusively for the purposes of your business, then you can claim a tax deduction for the purchase cost and its running expenses. If there is any private use, then provided it’s minor your claim is still valid.

Business purposes. Think of the 42-inch screen not as a glorified TV but as a centrepiece for making potent presentations to clients and staff alike. Simply connect a laptop and away you go with a slide show, DVD presentation etc. on a screen sufficiently large enough to be viewed from the back of most meeting rooms. Training is another use to which this asset can be put; there’s a growing number of health and safety DVDs to be watched, as well as interactive training modules for other work-related courses. Indeed, you might be able to get a plasma screen package that includes a free DVD player, stand, speakers etc.

Is it worth doing? Let’s say the plasma TV costs £1,409.99 including VAT. A small company could claim 40% of this as a first year allowance against its tax bill. At a Corporation Tax rate of 23.75% that’s only £113 off its tax bill (£1,199.99 x 40% x 23.75%) in year one, with 25% on the reducing balance thereafter (e.g. year 2, £42). So, common sense says you need a strong non-tax reason for doing this.

Other points. It’s probably best to get the company to pay for a TV licence, just to be on the safe side. New purchases are followed up by the authorities as matter of routine. The company could also pay for any insurance or maintenance contract that’s available. Over the Christmas period, if you are worried about security, you could always take the TV home for safe keeping.