Full Time Homeworker - What can I claim?

MrsChips

Sorry If this question has been asked a million times already. I've searched the threads but need a little more information....

I am currently working on my 1st Tax Return, I am a full time Homeworker and I have converted a spare bedroom into an office which I use on a daily basis.

I understand I can claim Expenses for Utility Bills - Is this a set £3 per week or should I claim for 1/5 of the overall cost as I use Quite a lot of Electricity (My Computer is on all day until 10pm & I have lighting, heating and water to consider)?

Can I claim for re-decoration of my office, as I purchased furniture, paint. carpet etc

Can anyone recommend a Website, specifically for Homeworkers that tells you what you are entitled to claim for?

Sorry about all the questions in one fail swoop!! But I really dont want a huge Tax Bill and could do with some expert advice.

Thanks

fengirl_2

Are you employed or self employed, as the rules are different?

MrsChips

I'm self employed

fengirl_2

You include in your accounts all the running costs of the house in relation to the number of rooms in the house (excluding kitchen and bathroom). So, if you have 3 beds and 2 receps and use one bedroom for work, you would include one fifth of the utility bills for the year.
Redecoration comes under repairs. Desk, etc would be claimed as capital allowances. The general rule is that you include all the expenditure incurred in running your business - it is no more complicated than that. I am nto sure if a website would be of any help as everyone's business is unique.

MrsChips

Thanks Fengirl - Much appreciated.

Everyone else I have spoken too seems to think i'd be better off with an accountant - but money's tight at the moment so i'm trying to do it myself. Sounds easy enough, but I just want to get it right so that I claim for everything i'm entitled too!

Another Quicky - Do you think it's quite likely that I'll get money back rather than owing any as its my first year of trading so had set up costs etc?

fengirl_2

You dont get money back unless you have paid tax in the first place! If you make a loss, you can claim relief against other income in this year, or elect to go back to previous years.

PasturesNew

Be aware that if you use a room SOLELY for business, it could have Capital Gains Tax implications at some future date when you sell. It is often better to have a room that is dual purpose.

Frugaldom

I work fulltime self-employed too and find most of the info I need at www.hmrc.gov.uk where I also file my tax returns online.

I had an office & store facilities exclusively for business use, but those were subject to commercial rates rather than a percentage of council tax, even although they were attached to the house. I'm now about to move again and will be integrating home office space into living space, so I'll be calculating my overheads/expenses as a percentage of the floor space, as the room won't be exclusive to business use. If there are any costs incurred in setting up the new office space then those will be deducted, as will the costs involved in moving all the office equipment, as it's a full van load.

If you paid tax in the previous year, perhaps from employment, then you may find that you are due a rebate. I derived part of my income from a part-time job (as an employee) and the entire amount earned from that was taxed at source as a second income, resulting in an overpayment by the end of the tax year - not much, but it was repaid to me.

Don't forget your National Insurance contributions; as far as I'm aware these are classed as part of your income, so they aren't deductable that I know of: I was always advised to pay them, even when exempt, as the contribution helps towards your pension.

When you have completed your tax return then you can also run the figures through the site to see if you may be entitled to any working or child tax credits. Inland Revenue doesn't automatically offer you these, you need to apply. At worst, they'll say no.

Good luck with your home based enterprise

MrsChips

Thanks everyone... Lots of useful information here

You dont get money back unless you have paid tax in the first place!

Fengirl - The reason I asked is because I was told by a fellow homeworker that they got a refund in their 1st year and that most people will - But thanks for putting that straight.

If you paid tax in the previous year, perhaps from employment, then you may find that you are due a rebate.

Maybe this is why my fellow homeworker got a rebate in her first year? I worked from April - August so paid tax for that period.

Anyway I wont get my hopes up for a rebate, better start putting a bit more aside for the bill in January!!

fengirl_2

The point about a CGT liability on the sale of your home is a bit of a red herring. This is highly unlikely to arise - in 26 yeras, I never saw such a libaility - due to the small amount of space used for a business and the relatively short time the room was used for over the period the house was owned, so dont le tthta put you off.