Running my new business from home - what can I claim back??

redshep_2 · 30 May 2006 at 4:22PM

Hi there,

I have just discovered this site, so hi to eveyone!

I have just set up a company which I will be running from home. I have an office dedicated to this and belive I can put in expenses of a 1/5 of my bills (5 room house).

However, I am not sure what it is I can claim - Council Tax, Rent, Electricty and Gas?

I am just starting to put this stuff in my new accounting package - so I guess I just work out the percentage and then put that amount in as an expense to the company?

Cheers and a great website!

Mary

tipsychick · 30 May 2006 at 4:34PM

My accountant advised me to be careful about doing this.

I'm not sure of the correct terminology but essentially if you designate say a fifth of your residential property for commercial use, there are then big tax implications when you come to sell the house as it is no longer a hundred percent residential property.

For the same reason, I didn't get any tax relief on council tax, gas, electricity, etc.

I think my accountant just puts through a nominal amount for use of a room as an office - £200-ish a year! The business phone bill and internet I claim for though.

I'd take professional advice before doing this.

Debt_Free_Chick · 30 May 2006 at 5:05PM

tipsychick wrote:

I think my accountant just puts through a nominal amount for use of a room as an office - £200-ish a year! The business phone bill and internet I claim for though.

Yes a nominal amount for "use of home as office" seems to be what the professionals recommend. I claim £10 pw (£520 pa). In addition, claim all other "actual" costs provided they are wholly incurred for the purpose of carrying on the business e.g. phone, internet, stationery, computer consumables. If the phone & internet are shared use for business & personal, then charge a pro-rata amount e.g. if you estimate that you sue the internet for business 75% of the time, then claim 75% of the costs (usually just the ISP subscription).

Watch out for capital allowances on those items that you cannot put through the P&L for tax purposes!

pnefan_2 · 30 May 2006 at 5:08PM

Hi,

As an accountant, I'd strongly advise you to get professional advice, but tipsychick's advice is pretty good. Basically, you would lose the capital gains tax relief ,which each of us has on our principle private residence, on the fraction of the house that you claim is for business use but would get business taper relief (which isn't as favourable). Claiming use of home as office as tipsychick suggests is likely to be simpler and safer.

Running my new business from home - what can I claim back??

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