Last week, alongside the iPhone 7, Apple introduced the hotly anticipated Apple Watch 2. New features like Waterproofing, longer battery life and a 50% faster chip means the Apple Watch is more geared up for business (or the swimming pool) than ever.
Wouldn’t it be great if we could sign off this device as a tax deductible expense? A blend between business function and personal entertainment means things aren’t entirely clear cut.
Here we explore two options.
iPhones/iPads as Taxable Expenses
HMRC grant that both iPads and iPhones are fully tax deductible business expenses because they are (PDAs) – palm top computers or hand-held devices that function as a personal information manager.
HMRC do not specify what PDAs are subject to their regulations but the Apple Watch has features which are similar to that of an iPhone or iPad (PDAs). Some of these features include calendar alerts for business appointments, business related texts, business calls, work email and social media for your business. Therefore, HMRC guidelines would appear to categorise the Apple Watch as a Tax Deductible Expense.
Two approaches for making your apple watch tax deductible:
- Partly Tax Deductible approach – A reasonable approach would be to deduct the retail price of the cheapest model and disallow anything above and beyond that. For example, if a business person was to buy an Apple Watch for £599 the reasonable approach would be to disallow the difference between that and the Sports Watch (Apple Watches cheapest version).
- Fully Deductible approach – An argument could be put forward that the appearance of the Apple Watch needs to be in line with other devices and your appearance at work. The Apple Watch priced at £599 may be the only suitable watch for your business (IFAs, Lawyers, Accountants etc) and therefore the full cost of the watch is allowable as a tax deductible expense.
In summary, it would seem sensible to believe that your Apple Watch should at least be partly tax deductible due to the fact that mobile phones and iPads are currently tax deductible.
However, currently HMRC has not taken a tax deductible standpoint on the Apple Watch and there have been no suggestions that they intend to.
Our discussion is purely speculative. We would always advise seeking professional advice before making any financial decisions.