To business expense a handbag

[CrotchBurn]

I am self employed (think graphic designer) and am getting a bit embarrassed of carting around a raggedy rucksack when I go to work spaces and occasionally when I see clients.

I've seen a really nice handbag, theres also a laptop sleeve that goes with it (I mean a matching laptop sleeve but sold separately).

Would I be unreasonable to business expense it? I feel torn because it's kind of me as well as for work stuff

satnighttakeaway

If you're self-employed, the necessarily doesn't apply.

percheron67

KaptainKaveman

In accounting/tax, gift is also used as a verb - eg 'he is gifting her his shares'.

I get that it's hard to justify.

On the other hand, how do companies get away with what they give employees?

For example I cant expense a handbag, fair enough.

So how come companies can put employees up in expensive hotels? Why arent they forced to choose inexpensive chains such as premier inn for example? If it's just about have a basic clean place to sleep overnight on business?

Or employee train tickets? How do they justify first class?

Or company cars being "naice" cars? Why dont employees just get given a basic citroen or something?

I guess what I mean is: if you're self employed, why arent you allowed to business expense nice things things that add to your comfort and "professional standing" while not being 100% strictly necessary, but companies can do it for employees?

I’m just here hoping to see the bag....

@KaptainKaveman

"Published accounting standards" are obviously pretty low then, hobby.

Not that kind of standard It's legislation. I'm sure there are lots of terms or words (or ways of using words) in various professions and industries that aren't common in day to day language. Hence it's not always a good idea to categorically say that someone's got their words wrong, when it is actually the correct term for what they're doing. When I started in a different industry, I was convinced a colleague was getting a word wrong (she had English as a second language). I'm so glad I was polite enough not to mention it, because it's very much correct and normal usage in the industry

CrotchBurn

You can expense the handbag - as long as it is wholly and exclusively for business purposes. When an employer pays for an employee to stay in a hotel, it is wholly, exclusively and necessarily for business purposes. First class tickets cost the employer more, so reduces the taxable profits, but also means that the employer has less disposable cash at the end of the financial year, so that's a choice they make. Company cars come under Benefits In Kind, which is different.

You cannot claim a handbag as a business expense.

Costs you can claim as allowable expenses
These include:

office costs, for example stationery or phone bills

travel costs, for example fuel, parking, train or bus fares

clothing expenses, for example uniforms

staff costs, for example salaries or subcontractor costs

things you buy to sell on, for example stock or raw materials

financial costs, for example insurance or bank charges

costs of your business premises, for example heating, lighting, business rates

advertising or marketing, for example website costs

training courses related to your business, for example refresher courses

Put a logo on it it'll be right

Basically you can charge it to your business BUT you can't deduct it for tax purposes so you couldn't reclaim VAT and couldn't deduct it from earnings before paying tax.

Hubby buys logo'd Polo shirts and wears them all the time he is working even when at home and we can charge those as a "uniform" make great advertising as well when he is on site

@LivingOnAnIsland

CrotchBurn

You can expense the handbag - as long as it is wholly and exclusively for business purposes. When an employer pays for an employee to stay in a hotel, it is wholly, exclusively and necessarily for business purposes. First class tickets cost the employer more, so reduces the taxable profits, but also means that the employer has less disposable cash at the end of the financial year, so that's a choice they make. Company cars come under Benefits In Kind, which is different.

Just to follow on from LivingOnAnIskand excellent post.

CrotchBurn
You can also claim luxury hotel cost and first class travel. Provided it is for business travel is wholly and exclusively for the purpose of your trade.

But just to clarify, HMRC does not reimburse you for the cost of the hotel. There is no tax credit. You would need to pay for the expensive hotel and then deduct the costs from your profits.

Agree with the previous posters who say you don’t want to give HMRC any reason to dig through your tax affairs. DH and I got investigated and I was so relieved everything stood up (we have a very good, very strict accountant) and we didn’t have to pay any additional tax. It was still intimidating and a massive pain though.

The handbag isn’t worth it!

A laptop bag or briefcase yes, handbag no. It has to be items needed in the line of work that you wouldn't otherwise buy. Hmrc would also consider the price - a £50 laptop bag would serve the purpose of transportation of laptop, paperwork and personal effects quite adequately, I'm guessing this costs a lot more!

Unbelievable - just buy yourself a bloody bag.

You can stay in whatever hotel you like for business purposes OP, but the taxman doesn't pay for you to stay there. The cost of your hotel is taken away from your business profits so you don't pay tax on that amount. YOU, ie the business, have to pay for the stay so you're essentially eating into your own profits. It makes more sense to stay somewhere cheaply and and save yourself a hundred quid rather than staying somewhere more expensive and claiming back the tax on a hundred quid.

Most big businesses do have codes and rules about hotel stays and first class travel - if first class is allowed employees are usually expected to work. When I worked for a company I had to get permission to do things like upgrade a hire car from manual to automatic. You could only stay in certain classes of hotels too.

You cannot expense a handbag. I don't think it's even a grey area.

If you buy the bag and laptop sleeve together, and the receipt reflects the laptop element, as does the entry in your accounts, I’d expect it would be fine. Especially if it is purely to carry a laptop and other business items. I’d see it as a choice in the same way as the nicer hotel or a fancier tool box. The more expensive it is the more likely it will be noticed though. And more so if profits seem lower than expected.

Morally, I see no problem. Professionally, check with your accountant who could then check with a tax specialist if unsure. In the past you could call HMRC but I’m not sure if that’s the case now.

@LonnyVonnyWilsonFrickett
But that's why I dont understand the difference between that and a bag.

Why can I stay in a £400 a night hotel and deduct that when I could have stayed in a £40 a night hotel...
...but not buy a £400 bag when I could buy a £40 bag?

I do have an accountant but I dont actually trust him: I've been SE for 6 years and have only just found out I could have been deducting the rent for my office (in my house) as an expense (totally unaware of me I guess but I did assume my accountant would tell me this sort of stuff)

Are you an MP?

@movingonup20

A laptop bag or briefcase yes, handbag no. It has to be items needed in the line of work that you wouldn't otherwise buy. Hmrc would also consider the price - a £50 laptop bag would serve the purpose of transportation of laptop, paperwork and personal effects quite adequately, I'm guessing this costs a lot more!

Does HMRC really monitor the cost of laptop bags? I find this highly unlikely.

You cannt claim the handbag. As PPs have said that it must be wholly and exclusively for business use which clearly a handbag isnt. You might get away woth the laptop sleeve IF you only use that device for work purposes.
Entire vourt cases have been fought over the principle of what is and is not a reasonable claimable expense. I'm pretty certain HMRC wouldn't accept the handbag.

@CrunchyNutNC
I think it is a bit of a grey area actually hence the 60/40 split in votes

@HarrietPotterska
Are you a non English-speaking cyborg? Check the OP

So what’s your stance if say Amazon or Starbucks lie about the use of an asset to illigally reduce their tax bill?

What tax bill? They don’t pay any!

@Lalalatte

Definitely worth getting an accountant, they can save you more than they charge and any problems and it's their fault. There will be people answering who don't necessarily know what they're talking about and just have an axe to grind

When you say "any problems and it's their fault" it sounds like you are suggesting the accountant would have to foot the additional tax bill??

If you are, that's 100% WRONG. You would have to pay the additional tax (it's your Return so it's your liability) !!!!!

I've come across some appalling "accountants" who really should not be able to operate in that capacity. The taxpayer aways has to pay for their cock-ups.

But a really good accountant is worth the expense imo.

www.gucci.com/uk/en_gb/pr/men/bags-for-men/briefcases-for-men/gg-black-briefcase-p-474135K5RLN1095?ranMID=37933&ranEAID=gcdL%2FATRVoE&ranSiteID=gcdL_ATRVoE-nc_4UIQthuU0x.r0mBZuaQ&utm_source=Linkshare_UK&utm_medium=affiliates&utm_campaign=1&utm_content=10&utm_term=2523611&siteID=gcdL_ATRVoE-nc_4UIQthuU0x.r0mBZuaQ&PublisherSID=2523611&PubName=Lyst+UK%2FEU

If you have an accountant they'll include it in your accounts if you say it's a business expense but then take it out for calculating tax.
Happens all the time 🤷‍♀️ lots of things can be a legitimate business expense but not allowable for tax.

My cousin needs a laptop (similar job) she has to cart about for work. She bought this bag in pink, to protect it>

and her accountant said she could claim as it was specifically to protect the laptop as the description has that it has a specific laptop pocket so she did. But it is definitely more of a laptop bag than a handbag