Claim tax relief on use of flat


J

Jon

I used to run my self employed business from my flat. I had bathroom,
bedroom, hallway, kitchen, living room and garage. I paid maintenance,
council tax, electric, water, mortgage interest, telephone.

What can I claim? How much can I claim?

It was basically running an internet business.

Regards,

Jon
 
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R

Ronald Raygun

Jon said:
I used to run my self employed business from my flat. I had bathroom,
bedroom, hallway, kitchen, living room and garage. I paid maintenance,
council tax, electric, water, mortgage interest, telephone.

What can I claim? How much can I claim?

It was basically running an internet business.
What do you mean by "used to"? Are you trying to introduce
expenses retrospectively into your accounts for past years?
It's possible, within limits, but I wouldn't really recommend
this kind of "afterthought" rewriting of accounts.

Having said that, you can claim a reasonable amount based on
what additional actual costs you had as a result of running
the business at home as opposed to not doing so. This boils
down to claiming a share of the phone usage bills but not of
line rental (unless you put in a separate line for business
use only), a share of elctricity bills (e.g. for powering
equipment (buth that won't be much) and heating while you
were working at home if you would otherwise have turned the
heating down while out during the day), water (for extra
toilet flushing but only if metered).

It would be unwise to claim a share of maintenance, council tax,
and mortgage interest unless there is a defined proportion of
the total space which is exclusively used for the business,
but if you do that you may lose some of the Private Residence
Relief entitlement against CGT when you sell the place, and
it may make you liable for business rates.
 
F

Fred

Ronald Raygun said:
It would be unwise to claim a share of maintenance, council tax,
and mortgage interest unless there is a defined proportion of
the total space which is exclusively used for the business,
but if you do that you may lose some of the Private Residence
Relief entitlement against CGT when you sell the place, and
it may make you liable for business rates.
Is it wise to claim a proportion of rent as a business expense? Where part
of a room is used for business purposes?
 
R

Ronald Raygun

Fred said:
Is it wise to claim a proportion of rent as a business expense? Where
part of a room is used for business purposes?
No reason why not, if you are in fact renting the premises, since
if you don't own them, there can be no CGT implications because
you can't sell them.

If you own them, you can't "rent" them to yourself, as that would
also be non-private use.
 
F

Fred

Ronald Raygun said:
No reason why not, if you are in fact renting the premises, since
if you don't own them, there can be no CGT implications because
you can't sell them.

If you own them, you can't "rent" them to yourself, as that would
also be non-private use.
Many thanks. I'm using the dining area of a combined lounge/dining room as
an office. I assume because it is only part of a room mainly used for
residential purposes, business rates are not applicable. What sort of
percentage of the rent would be seen as reasonable since during the day the
bathroom and kitchen are also used when working. It is a 3 bedroom house
and I am employed (director) of a Ltd company.
 
A

Alec

Fred said:
Many thanks. I'm using the dining area of a combined lounge/dining room as
an office. I assume because it is only part of a room mainly used for
residential purposes, business rates are not applicable. What sort of
percentage of the rent would be seen as reasonable since during the day the
bathroom and kitchen are also used when working. It is a 3 bedroom house
and I am employed (director) of a Ltd company.
Usually 25% is accepted by Inland Revenue without question.

Alec
 
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F

Fred

Alec said:
Usually 25% is accepted by Inland Revenue without question.

Alec
Excellent - many thanks. There are two of us in a start-up company and we
are working from our respective homes. He owns his but I don't.
 

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