Running business from home

mattyh

My wife runs a sole trader business from home. Are there any tax benefits available to us?

Fran

Have a look here to see if you qualify for Tax Credits:-

Inland Revenue - Tax Credits



Boardmod comment:

Matt, I have moved your question to the "Cutting Tax" board where you might get more response.

mattyh

Thanks for the link, but it says we're not entitled to anything (not surprising, as it seems to be geared around kids and we don't have any)

What I was referring to more is if there are any allowances to reflect the fact that while working at home you are using your own light/electricity, heating etc, wheras you wouldn't in an office.

Can this be offset in any way?

MaryC

If you are self employed you can deduct from your income any expenses which relate to your business.
That does include premises costs. Normally for our clients we take a proportion of their household running costs eg council tax, electricity, water etc based on the size of their house. So if you live in a house with 8 rooms and one room is used mostly for the business then it is reasonable to claim 1/8th of these costs.

Be careful that the room used as an office is also used for other purposes eg storage, guest use, tv room etc (doesn't have to be significant) as otherwise that room would be chargeable to CGT on the sale of the house.

The other thing that is usually claimed is car running costs, usually pro rated on a mileage basis so best to keep a mileage log of business journeys.
Telephone calls are allowable but if the phone is also used for personal calls then line rental is not allowable. If it is a second business line then it is OK.
Any books, professional subscriptions, training courses etc are all OK as well.

MaryC

mattyh

Thanks! that's a great help

bridiej

Hi Matt

I also run own business sole trader from home. Keep all the utility bills, phone bills, petrol receipts (if she uses a car for work at all).

I have an accountant who checks over my accounts for me and does the necessary regarding allowances.

It costs me £50 a year, but def money well spent as wouldnt have a clue otherwise!!!!

Like the previous poster said, make sure you use the room for something else as well as an office - my is the spare bedroom, which also includes a sofa bed and wardrobe. If you use the room solely as an office the council can charge you business rates for the room!

Let me know if you have any more questions, would be glad to help.

What does your wife do by the way? I run a secretarial services business in Kent.

mattyh

thanks for the tips, and i hope business is booming for you.

She does graphic/web design for local businesses

bridiej

Sounds interesting!

Business is just starting to "boom" - I now have several regular clients, plus the odd phone call with a new "one-off" client which is great.

It takes a while to build it up though, for the first few months I only had a couple of people so please let your wife know not to worry if it starts off quiet. It's natural and after a few months she'll have so much work she won't know what to do with herself (like the last month I have just had!!!)

noakesdoc

You can also claim a proportion of your ''home repair'' bills such as plumbing, breakdowns etc and i also claim a proportion of my 'cleaners' wages.

Plumpud_3

As a recently ex-employee of the Inland Revenue, I am concerned about the inaccuracies of some of the previous replies.

Business expenses must relate to the business. With regards to heating, lighting, council tax, etc., you need to contact the Tax Office that your wife has registered with who will discuss her individual circumstances and advise her exactly what she can claim. Working from home is not straight forward with regard to claimable expenses. I should know, that is what I do now.

Remember, if at a later date your wife is found to have overclaimed expenses (whether intentionally or not), not only will she have to pay the underpaid tax and national insurance, but interest and possibly penalties too.

Ring0

I am a home worker and have looked into this subject. The general rule is count the amount of rooms in your house and deduct the hall, landing and bathrooms. You are then able to claim back utility bills for the proportion of the house that your office uses eg. If you use one room of a 6 roomed house you can claim back one sixth of the bills.

I believe that you should also tell your local council that you work from home and consequently pay business rate council tax for that room. I haven't done that for obvious reasons.