Asset bought for mixed use

How to treat the purchase of an asset that you bought to use in your business but also to use personally.

Here's how to treat an asset that you buy for use both in your business and privately. For example, you might buy an iPad to use while you're travelling on business, but which you'll also use to play games.

Sole trader / partnership / LLP

This deals with an asset that's for your own use as a business owner. If you're buying an asset for an employee of your business to use, the rules apply as for company directors.

Let's say you bought the iPad for £600 including VAT, and you expect that the iPad will be used 80% for business and 20% for personal.

You need to split the transaction when you explain it, and post 80% x £600 = £480 as a Purchase of Computer Equipment, claiming VAT as appropriate.

FreeAgent will then put in another transaction for the difference, £120, which you need to explain as Money Paid to User > Drawings.

This is because you are only allowed to claim capital allowances and VAT on the business use of the asset, as it's for your own use as well.

Limited company

Because you are an employee of the business, different rules apply.

Explain the full cost of the iPad as a Purchase of Computer Equipment, claiming VAT as appropriate.

Depending on how much the asset is used privately, and what it is in your actual business (for example, it may be an iPad but it may also be a car, or a mobile phone) there may also be a taxable benefit to record on form P11D in respect of this asset.

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