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Chez

Claiming heat light and power ...

I am right in thinking that because we work at home, I can claim the amount we spent on domestic utilities (ie, heat, light, water, power) by number of 'living' rooms in my house (ie, bedrooms and living rooms), aren't I?

So, we have four bedrooms and two living rooms. We have dedicated office space in one of them. So in my accounts I submit:

Heating oil & coal & logs / 6
Electric / 6
Water / 6

I have emailed Benign Accountant to check, but he might not get back to me for a day or two and I am on a roll now ...
judith

I have always claimed a certain sum for "Use of home", rather than calculating specific figures for each of those utilities.
Chez

Hmm, okay, that's another way to do it, I guess. Perhaps I'll have a rummage round the tax people's website ....
vegplot

You can claim a proportion. I forget what it is but if you'er using one room as an office I think you can claim a 1/4. Best to check though.
goldy1

I've had a quick look round the direct.gov and Tax website none the wiser. Try the help line they are realy good at guiding you through any problems.
Fee

This section on the Business Link website might be handy to read, Chez:
Chez

Thanks chaps!
RichardW

Yes but the could be down sides too.
Like capital gains taxes when you sell the house & biss rates etc.

Justme
jema

I don't think Business rates come into it, for when the main use is still residential.
lettucewoman

we claim a quarter of the bills for leccy etc.
RichardW

jema wrote:
I don't think Business rates come into it, for when the main use is still residential.


I think to claim the relief you have to declare sole use of a room as biss only. That then leaves you open to other issues. When we used to run a biss from home we had almost a 1/4 of the house just for work use but after taking advice the risk of the capital gains & biss rates just were not worth the risk. Also sure that farms are not covered by this in the same way.

Justme
RichardW

Quote:
What happens if I use part of my house for
business purposes?
You may be liable to business rates on the proportion of
your property used for business purposes. Please ask for a copy
of our guide ‘Council Tax and Business Rates: working at or
from home’.



from here

And the document it says to get here

Quote:

Working from home
If you work at or from home, the part of the property used for work may be liable to business rates (also known as non-domestic rates) whilst the remainder of the property will continue to be liable to council tax (although an alteration may be made to its banding).

To decide whether or not part of your property should be liable to business rates there are a number of things we have to consider, including the extent and frequency of the non-domestic (business) use of the room (or rooms) and any modifications made to the property to accommodate that use.

Each case is considered on its own merits, and normally we will visit your property to check the facts before an assessment is made for non-domestic rates.




Justme
RichardW

Quote:
Tax on the sale or disposal of your main home
You do not have to pay tax as long as:

you bought it, and made any expenditure on it, primarily for use as your home rather than with a view to making a profit
the property was your only home throughout the period you owned it (ignoring the last three years of ownership)
you did actually use it as your home all the time that you owned it and, throughout that period, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger the garden and area of grounds sold with it does not exceed 5,000 square metres (about one and a quarter acres) including the site of the house
If you are married or in a civil partnership and not separated you and your spouse or civil partner can have only one such residence between you.





Quote:

Who qualifies for private residence relief
Generally, if you have lived in your home and it has been your only home all the time that you owned it, you will not have to pay Capital Gains Tax (CGT) on any money you make when you sell it because it will be covered by private residence relief.

However, you may not qualify for relief on the whole property if you:

have a garden or grounds that extend to more than 0.5 hectares (roughly the size of a football pitch)
have extensive outbuildings
have used any part of it exclusively for business purposes
bought it primarily in order to make an early sale at a profit

If you're selling your home and you own more than one property, or you've used part of the property for business purposes, such as using one room as an office, taking in lodgers or letting out all or part of the property for a while, you may be liable to pay CGT.

Whether or not you still qualify for some private residence relief will depend on your exact circumstances, so if in doubt, ask your HM Revenue & Customs (HMRC) Tax Office for advice.


Quote:
Self-employed and working from home
If you are self-employed and work from home you can still qualify for private residence relief when you sell your home if the whole of your property is used as a home, even though you work there.

However, if any part of your property is used exclusively for business purposes, for example as:

an office
a store room
you may have to pay CGT on part of the gain you make when you sell the property.


All quotes from the direct . gov web site

Justme
vegplot

When we worked from home we:

a) Never told the local authority about it.
b) Claimed a % of running costs back as expenses

The reason behind this that unless it was a commercial enterpise i.e. lots of vistors, vehicles etc. then the LA wouldn't be particularly interested or bothered.

This was deemed perfectly acceptable by our local tax office when we enquired as at the time it was considered a home office. The local authority said very much the same.
RichardW

Basicaly what I am saying is

DO NOT TELL THEM YOU USE ONE AREA EXCLUSIVLY FOR WORK STUFF TO HELP JUSTIFY YOUR EXPENSES

it will hurt in the long run. Ensure any area used for work has a dual purpose for residential too.


Justme
vegplot

Justme wrote:
Basicaly what I am saying is

DO NOT TELL THEM YOU USE ONE AREA EXCLUSIVLY FOR WORK STUFF TO HELP JUSTIFY YOUR EXPENSES

it will hurt in the long run. Ensure any area used for work has a dual purpose for residential too.


Justme


Very Happy
sally_in_wales

Timely thread, I need to get on and do my tax return for last year and was dithering about what to claim for. Never have claimed for the house before, but we have business stuff tucked into every room except the loo and bathroom, so I reckoned claiming one rooms worth of electrickery and heat seemed reasonable
lottie

The tax offices run free one day courses for self employed/people about to become self employed and they give you all the info about what you can claim for if working from home and how to go about it---my O.H.went to one in Aberystwyth 'cos he was doing a bit of consultancy work when he retired last year----found it really helpful.
vegplot

sally_in_wales wrote:
Timely thread, I need to get on and do my tax return for last year and was dithering about what to claim for. Never have claimed for the house before, but we have business stuff tucked into every room except the loo and bathroom, so I reckoned claiming one rooms worth of electrickery and heat seemed reasonable


A friend, who once worked as a tax inspector, told me once that they tended to target honest small business because it was easier than investigating a dodgy business. Likewise limited companies, even small ones, as they had formal accounts.

You'd be expected to claim some heating/lighting/rates/rent expenses otherwise they suspect you're not declaring everything (ins or outs).

I'm fairly positive we claimed 1/4.
Chez

I have gone for 15% of heating oil and electrickery. We were using a spare bedroom as a home office - but now The Grand Lodger Plan is about to come to fruition, we will have a purpose-built cupboard / desk (still in my head) in the living room that will do the job. So it's a dedicated, purpose-built work-area, but not a whole room.
RichardW

And lodgers are tax free upto about £4k year

Justme
Chez

Yup - and it doesn't effect (affect? I never know) your tax credits, either - it says so on the form. Yay!
sally_in_wales

http://news.bbc.co.uk/1/hi/programmes/working_lunch/7459639.stm
now I'm confused again
vegplot

sally_in_wales wrote:
http://news.bbc.co.uk/1/hi/programmes/working_lunch/7459639.stm
now I'm confused again


I don't see a problem with this. There are two provisio's which essentially state that the are claimed for is used exclusivley for business during business hours e.g. 9-5 and that the amount cliamed is reasonable.

In order words if you're being reasaonble then there isn't a problem but if you're pushing the boat out then then may see that as an indicator that your doing other things you shouldn't be.

A good taxman will instantly see if you're being reasonable, or not, just by looking at your submitted accounts.

If you are concerned make an appointment with your local tax office and ask them 'what if I was to do x, where would I stand?' type of questions. They are very helpful, normally, they even came out to us once and spent half a day with us to show how things should be done, a personal questions and answers session.

Don't get too worked up by this, please.
Chez

sally_in_wales wrote:
http://news.bbc.co.uk/1/hi/programmes/working_lunch/7459639.stm
now I'm confused again


Interesting what it says about claiming a part of your mortgage ... need to ask Benign Accountant about that.
Lorrainelovesplants

I claim a percentage of my phone, broadband, elec, water AND I (the owner)rent premises to me (the business) of £10 a month.
(My accountant told me to do that)
vegplot

Lorrainelovesplants wrote:
I claim a percentage of my phone, broadband, elec, water AND I (the owner)rent premises to me (the business) of £10 a month.
(My accountant told me to do that)


That's cheap. can I rent a room?
Lorrainelovesplants

£10 a week - sorry.........
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