Quick Accounting Question

[TomB]

Hi All,

Quick question about claiming rent and council tax as a business expense.

Say someone works at home 7 days a week, full time on their business.

They live with their partner and pay rent and council tax. They have an spare room that doubles up as an office. The flat has 5 rooms in it

What % would you think would be claimable for tax purposes.

So just for example say, they could claim 50% of the rent cost, would they claim 50% of the total rent so if rent was £600 they would claim £300, or would they claim 50% of their share of the rent, so they would claim £150?

Thanks

T

 

[Adventurelife]

Home expenses that can be claimed - Other expenses: home: household expenses: expenses that are deductible

Home expenses that can't be claimed -
Other expenses: home: household expenses: expenses that are not deductible

If you own the house be very careful about future capital gains tax

Peter

 

[TomB]

Hi Peter,

Thanks, its a rented flat, not owned.

i should have said that is was self employed, the links lead to advice for businesses and corporations.

I'll check out the individuals page though, see what i can find.

T

 

[Brian McIntosh]

Hi Tom,

obviously your best bet would be to talk to an accountant but, as far as I'm aware you can claim a percentage of your floor space against tax and heating, lighting and phone. I leave my accountant to sort all that out for me. I'm sure the HMRC website would give you some info.

 

[Scottish Business Owner]

Tom,

You need to take some proper advice on this but i'll give you as far as I know regarding this. You cant seriously claim you work in your business 24 hours a day 7 days a week so that wont hold water with HMRC. If you have five rooms in your house and you use one for business then at the very most you can claim 20% (i.e 1/5th). You also mentioned it doubles as a spare room. I would be very careful about this as they could disallow any claim purely for this reason.

If you split the rent you can only claim on the portion you pay. I dont want to sound too harsh here but my experience is that a claim in respect of rent etc isn't really a major claim and i certainly wouldn't be claiming over the odds as it's more than likely to prompt some sort of checking. I think ultimately it needs to be at a level you are comfortable with justifying but as I said you need some advice here

 

[TomB]

HI ,

Thanks for the advice, it isn't me personally.

There is no bed in the room i class it as a spare room

the business is the sole form of income, they do work 7 days a week and are in their first year.

i was think along the lines of 1/5 of the rent, council tax, heat and light but wanted to see what others thought.

Thanks All

T

 

[Scottish Business Owner]

Tom,

I think 1/5th would the starting point but I still think they wouldn't buy it being occupied 24 hours a day, they would maybe accept 50% but I cant see it being 100%. The bills I would agree would be one fifth as I cant see any other reasonable way of measuring it.

 

[TomB]

i didn't think anyone would get away with 100% :001_smile:

they do keep their phone bills and mark the call charges that occur for business, and claim 100% but only a 1/5th of line rental.

A question for my own personal circumstance, i own my home, but i don't claim any of my mortgage payments as i was told about the potential capital gains issue.

But I thought that the rules had been changed slightly, or did i imagine that?

Thanks again , as usual your a great help :thumbup1:

T

 

[Scottish Business Owner]

Tom,

There still is a potential capital gains issue as far as I am aware but this area isn't really my expertise. I think it would be good to get clarification on this so let me speak with a few people tomorrow and I will come back with a better response

 

[TomB]

Thanks ,

Much appreciated!

T

 

[Brian McIntosh]

from what I remember of my conversations with my accountant, if you have a room in your house that is used solely for business purposes then when you sell your house, a portion can be claimed as capital gains. , i'm sure, has better contacts than myself but it's all down to having exclusive use for business.

 

[Scottish Business Owner]

Been checking a few things and found the below:-

Self-employed can set mortgage costs against tax, says HMRC - Business News, Business - The Independent

This maybe confirms your initial thoughts Tom and I promise I will have a better response with links to HMRC material tomorrow.

 

[Adventurelife]

I am sure there is something about council tax not being able to be deducted as well as that is residential tax and not business.

To be honest when I looked at it a few years back I decided to not bother claiming anything as it was so complicated as I work from home some time and from the office the rest and it has all sorts of Kick on effects with regards transport/fuel/capital gains etc.

May look again if it can be a reasonable deduction though

Peter

 

[sreeves2007]

Hi guys,

I've not got a clue what can and can not be claimed but i work from home 24/7 as a sole trader... one room is soley used for office work, nothing else....

All i am doing is i've a great wee accounts, project management software that lets me upload my statements, cross reference any expenses, bills, rent, invoices paid, etc...

The sole purpose of this... to keep the accountant less busy when she needs to do her job so my bill comes down... hahaha... she will take care of what i can and cant not claim for... she will have the correct experience to know just how much i can claim for rather than me claiming for the lot.

Also, check your local council if you rent somewhere... if you work from home and are self employed and you work alot of hours and are not getting the enough cash to pay your monthly outgoings... they may help you with some benefit.

over and out!!
sr