Use of home as office

**thinkofaname** · 31 March 2004, 16:18

Use of home as office

I have come across two schools of thought on this - neither verified for sure by the taxman.

If you use part of your home as an office, you are certainly entitled to be reimbursed for some of the costs you have incurred paying rent for your home.

(1) Rough and ready, divvi up the rooms you have in to house, and assign one as your office, then pro-rata the costs. So in your case, 1/3 of the rent can be claimed as a business expense. Be careful though, that the room is wholly for the purpose of operating your company from. If it also contains a bed, you're probably a dead duck.

(2) Square footage. Calculate the square footage (only needs to be approximate) of your house, and the square footage used for your office. Divide one by the other to give you the ratio of costs you can attribute to company. Don't include bathroom or kitchen space. Even though you need to use these when you are working from home, the Taxman probably won't buy it. Do up a little floor plan sketch, do the calc's, then put it in your file if the Taxman comes knocking.

Good luck!

**pickle** · 31 March 2004, 17:27

I like the square footage idea. I'vew just moved into a new flat so no longer have a dedicated room for an office (rather half of a room is used as office), so the draw up a plan thing soudns perfect.

**Simes** · 31 March 2004, 18:49

re

I've always been recommended to use the £40/month rule of thumb.

This by accountants, not "my mate".

**partimer** · 1 April 2004, 09:31

re: re

Speak to your accountant before you do anything but I can say 3 things.
1) The IR use to "try it on" by charging you business rates if you tried "renting" a room for your company. They lost a test case so don't let them con you on that score - Thanks to Xog for the info.
2) If you are renting yor apartment you may not be allowed to run a business as part of yor tenancy agreement. Better check since your insurance policy may be void ...
3) I was told 30/month but this became dodgy under IR35 since it had to be part of the 5 percent expensives. Outside of IR35, it had to be fairly low since if you took the piss then it was a benefit in kind ... tax implications

Don't start making it large percentage of your rent as it's a red flag to the IR.
Complicated so speak to your accountant.

**xoggoth** · 1 April 2004, 11:00

Re: re: re

One of those very gray areas really. Concur with above, smallish amounts where you can show you have attempted to arrive at some real cost are probably ok. I too tend to use about £10 pw for full working week and reduce pro rata for only some time at home.

**thinkofaname** · 1 April 2004, 11:49

A bit old - but relevant

Check out the article below written by one of the many UK 'tax experts'. It confirms the grayness of this, but also reinforces the point, if you think you're due some tax relief, get it!

www.taxationweb.co.uk/taxdoctor/1.php

Cheers

**pickle** · 1 April 2004, 15:34

Re: A bit old - but relevant

10 pound a week? Christ, a 1 bed flat in central London is 250 a week, surely claiming only 10 pound a week would be shooting myself in the foot.

Still, a fair amount based on the calculation of office space to domestic space would be about 65 pounds a week. Which may be just waving a red rag to a bull as far as the IR are concerned .

**xoggoth** · 1 April 2004, 19:39

Re: A bit old - but relevant

Nevetheless it seems to be the sort of figure the IR will wear.

That site is out of date on the point about CGT. Also do not think it is right on another point. NAA but believe you cannot claim for any portion of domestic rates.

There used to be a site that made a living out of allowing people to claim this and other obscure allowances, you filled in an online form. Try a search.

**passthevas** · 5 April 2004, 20:22

UC don't do it anymore

The Umbrella Co I used stopped allowing home office some 12 months ago. I suspect because they didn't what the IR "looking" at them.

Use of home as office