Self Assessment: HMRC guide contradictions

Introspective

Hi - I'm trying to calculate my expenses for my self-assessment.

If I work from home, using 1/5 of my flat for 8 hours a day, what proportion of fixed and variable costs can I put down as expenses?

The HMRC guide (BIM47825) seems to contradict itself:

In example 4, Chris claims works 4 hours a day so claims for 4/24 of the fixed costs, as well as adjusting for space.

But in example 6, Gordon claims for 8/10 of fixed costs after adjusting for space. His claim is a for a proportion of the time the room is used (10 hours a day), rather than for a proportion of the whole 24 hours.

Which example should I follow?

jimmo

Take a look at BIM 47815
http://www.hmrc.gov.uk/manuals/bimmanual/BIM47815.htm
The examples in BIM 47825 are not necessarily consistent with each other. They are examples of what might be acceptable to HMRC.
Whilst it may not actually say so in the manual, I would suggest that there is often a significant difference between a living room and an "office".
In example 4 Chris uses her living room (exclusively) for 4 hours a day for her business. To me, that conjures up an image of Chris sitting at the dining table using a typewriter or laptop with various papers, books etc spread over the table. When she finishes her work for the day she packs away her work and the dining table becomes a dining table again.
So, for 4 hours a day the living room becomes an office. For the rest of the day it is a living room.
In example 6 Gordon actually has an office in a separate room and, 24 hours a day, it is an office. However there is some non- business use and it would be relatively straightforward to claim that 8 hours per day it is a business office, 2 hours per day it is used privately and 14 hours per day it is unused.
Its not a precise science, its a question of judgment and personal circumstances.
Now, you say you live in a flat and 1/5 of it is used for your business 8 hours a day but you don't say 1 room out of 5. You don't say if the workspace is used for other purposes for the remainder of the day.
If you live alone in your flat it could be entirely reasonable for you to claim that 1/5 of it is a dedicated office with a small proportion of private use. If you are living with a partner and have a couple of children then claiming that you have a dedicated office in your flat will look dubious to the taxman to say the least.

Introspective

Thanks jimmo.

I realise that it's a judgement call, but the difference I find difficult to reconcile is that Gordon ignores the 14 hours of the day that his office is empty, and therefore claims a solid 8/10ths of the fixed costs as expenses.

Chris claims only 4/24ths of the costs, since she divides her working hours by a full 24 hour day. If she followed Gordon's example she could claim 4/8th.

I'm assuming Chris's work is just as valid as Gordon's, and that they also apportion for space fairly. In both cases that space, be it dining table or office, is used for work in the day, then later by the family and then is empty at night.

I don't want to get hung up on these examples particularly, but in general the difference between claiming a proportion of the time the room is in use, and claiming a proportion of 24 hours, can be a good few hundred pounds.

In my case, I have a room I use as an office during the day and which sees use by my girlfriend and me as a computer/reading room in the evening. I think 1/5 is a fair proportion of the space.

So in terms of time, if I work 8 hours in the day and then the room is used for 4 hours of leisure in the evening, do I claim 8/12th or 8/24th?

Thanks!

Introspective

Answering my own question here: it seems the difference is that an office is an office most of the time except when it is occasionally used for family or leisure time, and a living room is a family room most of the time but can be occasionally used as an office.

chrismac1

Personally I love confusing and contradictory aspects of HMRC guidance notes and the website - of which there are many but that's another story. You choose the option which gives you the more favourable outcome, providing it's not being totally silly and you can at least show some physical evidence of the work being done from home. if challenged, you then copy and paste the example straight from their own website on which you seek to rely, they can hardly claim you were being unreasonable even if they end up disputing the amount being claimed!