Eligible cleaning costs?


F

Fred

I work from home in a Ltd company. I am a director in this start-up
company. I occasionally have customers and suppliers in my house for
meetings etc.

If the company employs a cleaner who cleans the house, less bedrooms, will
this be seen as a taxable perk? The area covered would be the through
lounge and dining room (where I work), kitchen, hall, landing and bathroom.
I feel these areas are the ones used through the day in the course of work.
My income is fairly low at the moment and so any taxable perk would have an
impact on my WTC etc, to the point a cleaner becomes quite expensive to me
personally.
 
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D

Doug Ramage

Fred said:
I work from home in a Ltd company. I am a director in this start-up
company. I occasionally have customers and suppliers in my house for
meetings etc.

If the company employs a cleaner who cleans the house, less bedrooms, will
this be seen as a taxable perk? The area covered would be the through
lounge and dining room (where I work), kitchen, hall, landing and bathroom.
I feel these areas are the ones used through the day in the course of work.
My income is fairly low at the moment and so any taxable perk would have an
impact on my WTC etc, to the point a cleaner becomes quite expensive to me
personally.
I would get the cleaner to invoice you separately for the clearly non work
portion so that there is less likely to be a benefit in kind challenge. How
much are we talking about here?
 
F

Fred

Doug Ramage said:
I would get the cleaner to invoice you separately for the clearly non work
portion so that there is less likely to be a benefit in kind challenge. How
much are we talking about here?
Probably a few hours a week, for £6-7 per hour. I would say £20-30. My
question was really based on how far a "work portion" could go. In essence
could it include the area seen by customers and used by myself during the
working day?
 
M

Martin

Probably a few hours a week, for £6-7 per hour. I would say £20-30. My
question was really based on how far a "work portion" could go. In essence
could it include the area seen by customers and used by myself during the
working day?
On another point, do make sure you have proper insurance in place for
employees _and_ clients being on the (home) premises.
 
T

tim

Fred said:
to

Probably a few hours a week, for £6-7 per hour. I would say £20-30. My
question was really based on how far a "work portion" could go. In essence
could it include the area seen by customers and used by myself during the
working day?
Personally I feel that you need to pro rata it based a lot more
upon the time of business use. If you claim for 3 hours cleaning
a week for a room used for meetings for 3 hours a week and
personal use for 165, the revenue will see it for what it is: TTP.

tim
 
A

Alec

tim said:
Personally I feel that you need to pro rata it based a lot more
upon the time of business use. If you claim for 3 hours cleaning
a week for a room used for meetings for 3 hours a week and
personal use for 165, the revenue will see it for what it is: TTP.
Also as a director you have to convince IR that working from home is
'necessary' for the performance of your duties. Otherwise, every director,
office holder or employee will be bringing clients home and claiming a
proportion of cost of heating, lighting, cleaning, insurance, Council Tax
etc as working expense.

Alec
 
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R

Ronald Raygun

Alec said:
Also as a director you have to convince IR that working from home is
'necessary' for the performance of your duties. Otherwise, every director,
office holder or employee will be bringing clients home and claiming a
proportion of cost of heating, lighting, cleaning, insurance, Council Tax
etc as working expense.
Working from home is obviously "necessary" in the sense that it is
cheaper to "rent" office space from yourself than to rent separate
business premises.

Were the chap not working from home, he'd necessarily be claiming
rather higher expenses, which would only increase the frown on the
tax man's face.
 
F

Fred

Alec said:
Also as a director you have to convince IR that working from home is
'necessary' for the performance of your duties. Otherwise, every director,
office holder or employee will be bringing clients home and claiming a
proportion of cost of heating, lighting, cleaning, insurance, Council Tax
etc as working expense.

Alec
There are no other company premises. Any work is either carried out at home
or contracted out. The house is rented so can claim an allowance fom the
company of 25% of the rent. No single room is used mainly for work
therefore my working at home should not attract business rates.

I doubt I can receive an allowance towards council tax?
 
D

Doug Ramage

Fred said:
There are no other company premises. Any work is either carried out at home
or contracted out. The house is rented so can claim an allowance fom the
company of 25% of the rent. No single room is used mainly for work
therefore my working at home should not attract business rates.

I doubt I can receive an allowance towards council tax?

Council tax can be an allowable deduction.

The IR are unlikely query relatively small amounts - say, up to £5 to £6 per
week.
 
F

Fred

Doug Ramage said:
Council tax can be an allowable deduction.
I'm genuinely surprised at that. Council tax is a tax I associate with
residential dwellings and business rates with company premises. Therefore I
thought you either pay council tax for the part not used for business use
and business rates on the part used for business. Typically though with the
banding structure, council tax doesn't reduce down a band if just a room is
taken out of the equation.

I live and learn!

The IR are unlikely query relatively small amounts - say, up to £5 to £6 per
week.
I was thinking along the lines as long as the purely residential parts of
the house are not cleaned or billed separately it'll be OK.
 
U

usenet

In uk.finance Fred said:
I was thinking along the lines as long as the purely residential parts of
the house are not cleaned or billed separately it'll be OK.
I'm also of the opinion that the IR won't query small amounts,
especially if they are small in proportion to the total turnover. I'm
pretty sure the IR (and C&E, etc.) have a set of 'norms' that they
check your returns against. If your claims are within the normal
range for the type of business thay are unlikely to ask questions
about specific items.
 
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T

tim

I'm also of the opinion that the IR won't query small amounts,
especially if they are small in proportion to the total turnover. I'm
pretty sure the IR (and C&E, etc.) have a set of 'norms' that they
check your returns against. If your claims are within the normal
range for the type of business thay are unlikely to ask questions
about specific items.
Agreed, I've seen a believable view that the 'working from home'
figure is 10 quid per week in total, not plus cleaning, council tax
electric etc...

tim
 
F

Fred

tim said:
to

Agreed, I've seen a believable view that the 'working from home'
figure is 10 quid per week in total, not plus cleaning, council tax
electric etc...

tim
I'm sorry but don't understand what this figure of £10 is? Am I right in
understanding that it the figure of benefit in kind to the employee, ie
where the company pays the cleaning, part council tax, part rent etc?
 
F

Fred

Council tax can be an allowable deduction.
What proportion of this can I claim from the company before the IR make
noises. Is it 25% as in the proportion of rent paid by the company?
 
T

tim

Fred said:
I'm sorry but don't understand what this figure of £10 is?
It's the figure that you can claim against tax for 'use of home
as office' without the revenue putting you in the 'audit' pile.

You may be able to justify more, you might find that the cost
of doing so (in yours and your accountant's time) is not worth
the effort. Unless the revenue are unreasonable in their
demands (for paperwork etc) you won't get these costs back.
Am I right in
understanding that it the figure of benefit in kind to the employee, ie
where the company pays the cleaning, part council tax, part rent etc?
This will be 'amount actually paid' minus the 'amount allowed' (i.e
the above 10 pounds)

hth

tim
 
S

Simon

Fred said:
I'm sorry but don't understand what this figure of £10 is? Am I right in
understanding that it the figure of benefit in kind to the employee, ie
where the company pays the cleaning, part council tax, part rent etc?
Its an amount that people have put on their returns and because it is low
and the IR does not have enough resources to challenge every claim, they
concentrate there limited resources on those that put more exhorbitant
claims on their returns.

We are talking about a director making a claim under S198 ICTA 1988 or S336
ITEPA 2003.

In Hillyer v Leeke, Goulding J said that the terms of S198(1) were exacting
and almost impossible to satisfy and Ihave to agree.

There are thousands of people who work from home and there are others that
have a work place at home. The difference might be subtle but it is there.

The office worker with the need for quite who goes home to work in the
comparative quite is not incuring costs that satisfy S198(1) as they are not
necessarily incured nor in the course of his duties.

The person who sets up office facilities and operates his own business from
his home is incurring expenses but these do have to be attributable to the
business activity. Domestic Rates or council tax do not fit that bill. They
would not vary whether the business was run from the home or not so would
not be allowable.

Where you do not have a room that is set aside for exclusive business use,
you are looking at a proportion of the room or rooms that are used for
business purposes and any bill that is greater because of the business
activity could certainly be demonstrated to have a business element.

This can happen for gas and electricity bills, itemised telephone calls but
others will not, such as rent, TV licence, council tax and anything else
that has a fixed charge and is not exclusively for the business use.

Although the bottom line here is even if it is not strictly correct, if you
are not greedy, you will probably not be asked to explain yourself.

Simon
 
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A

Alec

Fred said:
What proportion of this can I claim from the company before the IR make
noises. Is it 25% as in the proportion of rent paid by the company?
25% is a usual amount claimed, but you need to come to an agreement with IR
about the business use of your house. It's usually worked out on a
room-basis. If, for instance, you have 3 bedrooms and 3 reception rooms. If
you use one downstairs room exclusively for business (say for a meeting) and
one bedroom perhaps 50% of the time (say as a study), you could claim 1.5/6
= 25%.
Beware that if you claim part of household bills as a business expense, a
potential liability for capital gains tax could arise when you sell your
house. Also, as someone else has pointed out, you must tell your household
insurers that you meet clients on your premises. You'll probably need a
separate public liability cover.

Alec
 
D

Doug Ramage

Alec said:
25% is a usual amount claimed, but you need to come to an agreement with IR
about the business use of your house. It's usually worked out on a
room-basis. If, for instance, you have 3 bedrooms and 3 reception rooms. If
you use one downstairs room exclusively for business (say for a meeting) and
one bedroom perhaps 50% of the time (say as a study), you could claim 1.5/6
= 25%.
Beware that if you claim part of household bills as a business expense, a
potential liability for capital gains tax could arise when you sell your
house. Also, as someone else has pointed out, you must tell your household
insurers that you meet clients on your premises. You'll probably need a
separate public liability cover.

Alec
The OP is renting, so it unlikely that CGT will be an issue. Likewise, the
OP does *not* use any room(s) solely for business.
 
D

Doug Ramage

Martin said:
On another point, do make sure you have proper insurance in place for
employees _and_ clients being on the (home) premises.
Likewise for any items which have some business use - computers, cars etc.
 
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U

usenet

In uk.finance Simon said:
Where you do not have a room that is set aside for exclusive business use,
you are looking at a proportion of the room or rooms that are used for
business purposes and any bill that is greater because of the business
activity could certainly be demonstrated to have a business element.

This can happen for gas and electricity bills, itemised telephone calls but
others will not, such as rent, TV licence, council tax and anything else
that has a fixed charge and is not exclusively for the business use.

Although the bottom line here is even if it is not strictly correct, if you
are not greedy, you will probably not be asked to explain yourself.
I was a computer contractor for many years and worked (as is normal)
through a Ltd. company. My wife also does freelance work and uses the
company too.

In this situation it's quite easy to charge things as expenses to the
company, it doesn't appear on our personal tax returns as a claim for
use of the house as a business expense.

However we don't charge any cleaning or anything like that to the
company, on the other hand we're not too strict about making sure that
company sellotape is only used for company use. We do split phone
usage by having a separate line for the company.

I think the IR (as I said) have a set of norms for a small business
and as long as you are close to these norms they leave you alone.
We lose a bit by not charging cleaning expenses etc. to the company
but we gain a bit by using their sellotape (etc.).
 

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