Claiming Expenses

[phayes]

Hi,

I am getting mixed views on claiming for utility bills while using a room at home as an office, in my understanding I can claim for example 50% on a 2 bed house of the utility bills.

I would need an audit trail showing my monthly utility bills and 50% of these being claimed back through the business.

Now i read a previous thread which stated that the new 2006/7 tax rules have excluded these claims, is this for employees, can I still claim this as a business and if so can i pay through my personal account as the director and claim back from the business.

My office at home is the main location for my business and i work at client sites on a temporary basis, so why should i not claim?

Many Thanks.

[fzbucks]

I currently claim about £3.00 per week for using my home as an office - even after converting the spare room to an office and that's all it's used for.

if you try and claim to much for using your home as an office in the way you are describing would your home be liable for business rates?

[phayes]

I am unsure if my home would be liable for business rates or not, I know other contractors who are claiming this way.

I understand that you can claim of £104 per year with no calculations or receipts, that is £2 per week.

Can anybody else shed some light on this matter.

[Zorba]

I believe you have to include the lounge, dining room etc too. Bathrooms don't count but the kitchen might... can't remember.

[fzbucks]

I am unsure if my home would be liable for business rates or not, I know other contractors who are claiming this way.

I understand that you can claim of £104 per year with no calculations or receipts, that is £2 per week.

Can anybody else shed some light on this matter.

Sorry - it is £2.00 a week I am claiming - found the following on
http://money.guardian.co.uk/tax/stor...397295,00.html



'The situation used to be that people who were employed and working from home could claim tax relief for expenses incurred wholly, exclusively and necessarily in the performance of their duties. There were a number of people who'd set up an office in the back bedroom and then claim a number of overhead costs like gas, electricity and so on. The Inland Revenue has been resisting this for a number of years and said there is something called duality of purpose.'

In other words, if the Inland Revenue is persuaded that you are spending money on heating the house whether you were working in it or not, they won't give you the tax relief if you're on someone's staff. 'In the last budget they announced that they would allow an employer to pay an employee an allowance of up to £2 per week untaxed to cover any expenses associated with the home. Which isn't particularly brilliant.

'In terms of tax, there's not a lot to working from home [as someone else's employee],' he adds. 'There's the work/life balance stuff, but tax-wise it's really limited to that £2 per week.'

Added to this, he says, there can be tax downside to working from home. 'If anyone owns their home and sells it, they get principle private residence relief, which means you don't pay any tax on selling your own home. But if you have a room that's solely your office, the Revenue can and has argued that the proportion [of your sale price] that room represents isn't tax free.'

So if you have an eight-room house, close one room off as your office, sell the place and make an £80,000 gain, £10,000 of that will become subject to capital gains tax. The way around this, in the same way as Shaw found out for business rating, is to put something in the room that demonstrates it's not solely a business office. 'If you've got an upstairs room it's not much of a problem; it's when people convert a garage, maybe, and have separate access to the office, and can't get from the office into the house, that's when problems arise.'


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Don't know how much of this applies to your case - my accountant advised not to bother claiming for anything towards the running of the house except for theactual PC in the office and the office furnature etc which is solely for the business.

[phayes]

I just purchased a sofa bed for the office, could this be deemed as office furniture???

[fzbucks]

I just purchased a sofa bed for the office, could this be deemed as office furniture???

yes and you could sleep on it and claim overnight subsistence

[phayes]

I reckon the deal is I can claim for the main rooms in my house, i am going to do this as my direct debits will be my audit trail for payments.

So I have 2 bedrooms and one living room = 3 rooms, i can claim 33.3%

does this sound accurate anybody?

[timh]

Sorry to jump in on this one, but I've got a related question:

I'm in a situation where I have a room I can either rent out (for £260/month - hey, it's Swansea) or use as an office. Obviously, given the pitiful tax relief, I'll rent it out.

However, I do want office space - so what's the situation if I rent a smaller room (say £180/month) in somebody elses house to use as an office? That's a legitimate business expense, I assume. Would there be any tax implications for my company or the home owner regarding the commercial use of a residential property, extra insurances required, etc etc?

Seems like a good plan on the surface but I'm sure HMRC have thought of it already and buggered things up for me!