VAT Flat Rate Scheme and Buying a Computer

I am a freelancer operating through a limited company which is VAT registered on the flat rate scheme. I understand that being on the flat rate scheme means that usually VAT cannot be claimed back on my costs, however I am about to buy a new laptop and I understand there is an exemption for this kind of purchase? My laptop will cost £1,900 including VAT but I am considering purchasing a new printer at the same time which will take the overall cost to £2,200 including VAT.

Can you explain if I can claim back any VAT on this purchase?

VAT Flat Rate Scheme Computer Purchase


Answer, September 2016

The VAT flat rate scheme is intended to be a simplified scheme but there are some areas which are surprisingly complicated.

You’re correct in that being on the VAT flat rate scheme means that you cannot usually claim VAT back on your costs, however an exception to this is that if you have a single purchase of capital goods or equipment where the total cost of the purchase including VAT is £2,000 or greater, then you can claim the VAT back on the purchase.

If you purchase the laptop only, the total cost will be £1,900 which is below the £2,000 threshold, therefore no VAT can be claimed back.

However if you purchase a new printer at the same time and this is shown on a single invoice totalling £2,000 or more, then you will be able to claim back the VAT on the total purchase of both items.

This scenario is covered in HMRC’s VAT Notice 733, section 15.3 where it covers the question ‘What counts as a single purchase of capital goods?’ – it states the below:

a computer package (computer, printer, camera, scanner, speakers etc.) bought as one package is one purchase of capital expenditure goods. If the package costs £2,000 or more (incl. VAT) then input tax can be claimed

If you want to learn more about the flat rate scheme please see our article: VAT Flat Rate Scheme vs Standard Scheme

Also make sure you’re aware of the changes to the flat rate scheme from April 2017 with regards to Limited Cost Traders.