Self-employed people of MSE: How much self assessment expense did you claim last year

robinh00d

This thread is specially applied to self-employed who work from home, and would like to get a decent claim on self assessment expense.

HMRC has never been willing to provide clear information about claiming self assessment expenses. They always tried to keep this in the 'grey area'. Why? Because HMRC would be in a better position when the tax payer is not sure how much claim is too much.

Just search this forum for this topic, and you will find people warning each other about not claiming too much, or the taxman will knock your door soon sniffing around.

In fact, up to 2008, HMRC did not officially accept claiming fixed and running expenses for people who work from home (sorry for the weird url, new users cannot post links):

http:// bbc.in / tu4rqs

At that time, they published these examples as a guideline:

http:// bit . ly / cdou07

If you go through all the examples, you will see even the highest claim case, the 'Gordon' case, is not a realistic one. In the Gordon example, the architect's working room proportion for for council tax, mortgage interest and insurance is only £600 per year. If Gordon's working room only covers 10% of his whole house, this means his total expense of council tax, mortgage interest and insurance costs are only £6,000 per year. This figure is a joke in this country. On the other hand, if we stretch the whole council tax, mortgage interest and insurance annual expense to a more real figure of £12,000, this would mean Gordon has a house of 20 rooms, and he works in one of them.

Both of the above case in the HMRC example are far away from being realistic, and they have clearly been design to be of their benefit.

I am writing this to ask the other self-employed who work from home, and have files self assessment tax returns in previous years, to publish the highest expenses they have claimed.

Knowing these figures will give other new self-employed a higher confidence to go ahead and try a higher claim for this year.

Please contribute!

tomjonesrules

robinh00d wrote: »

If Gordon's working room only covers 10% of his whole house, this means his total expense of council tax, mortgage interest and insurance costs are only £6,000 per year. This figure is a joke in this country.

That sounds just about spot on for me. I am unsure at to why that is "a joke"?

suso

robinh00d wrote: »

This thread is specially applied to self-employed who work from home, and would like to get a decent claim on self assessment expense.

Knowing these figures will give other new self-employed a higher confidence to go ahead and try a higher claim for this year.

Please contribute!

The highest expenses I have claimed in 9 years of doing self assessment is 100% of the allowable expenses.

I do returns because of self employment, and UK land and property income, as well as the PAYE employment I have.

The figure claimed doesn't matter as long as it can be justified, inviting people to put down their highest amount claimed is inviting this thread to be deleted very quickly,

robinh00d

suso wrote: »

The highest expenses I have claimed in 9 years of doing self assessment is 100% of the allowable expenses.

Could you explain what claiming the 100% of the allowable amount means? That is, why would anyone want to claim less than 100% of the allowable amount?

chrismac1

The OP is I think trying to make sense of the HMRC website page on "use of own home" and assess how much he or she can claim. My advice on this is:

1. Stop trying to make sense of the HMRC website page. Like many parts of the site it is badly written. The examples given are mutually contradictory unless someone on here can show otherwise, noting that there has been much discussion on the meaning of this page on AccountingWeb, the conclusion being that the website page is a mess.

2. This is great news! You simply apply the example which is the most favourable to your own circumstances, and claim that. If ever challenged, you merely say you were following the HMRC's own guidance. Always good to be in that position!

About 50% of my clients claiim use of own home for business, the highest being £25 per week BUT note that this guy is a website designer with two large servers taking up much space and burning juice in his house. If challenged, I will simply invite HMRC to go round there. So what I am comfortable with ranges from £3 to £25 within my client base. If someone wants to go with a high figure I "sense check" this against what other information I have on the business - so someone doing say 20,000 business miles per year is in my view in no position to bang in a high claim for use of own home if he or she is a sole trader.

robinh00d

chrismac1 wrote: »

So what I am comfortable with ranges from £3 to £25 within my client base.

Thanks for providing this range, it helps a lot to know the upper limit with an example.

HappyMJ

You can claim whatever is reasonable. I have a 3 bedroom house. If I didn't have a business running from home I would have a 2 bedroom house so I claim the difference in rent between a 2 bed and a 3 bed. £30 a week. I then claim 1/6th of the gas and electricity which is my estimate of the business proportion of the bill (based on time weekly it's 28 hours business and 140 hours personal). That's only about £2 per week. Then I claim half of the phone, mobile and broadband. Weekly that's about £4. So my total claim is £36 per week or £1,872 per year.

robinh00d

HappyMJ wrote: »

So my total claim is £36 per week or £1,872 per year.

Given that your £36/week rate is kind of high comparing to the others, have you ever been contacted by HMRC to explain or justify this? Has the taxman ever visited your property?

chrismac1

No doubt he's been lucky so far. In the past year the clients who've had an enquiry have been the last clients I personally would have singled out for a look, every time HMRC has gone away empty handed after letters and high mileage visits in some cases. Meanwhile the guys who it is obvious to me are declaring 50% of their receipts if the country is lucky get away with it year after year. The workings of the HMRC database are a mystery to me and it's no surprise the annual shortfall in tax revenue of £30bn (HMRC disclosed value) or £60bn plus (accountancy profession value) exists. It is not my job to put on a tax return "50% of the takings if you are lucky", I ask the questions and if the guy says it's all going through the books and what he or she has given me is the full total of the takings then my job is to do the accounts accordingly.

Note that up and down the country the same situation exits for most accountants. It's a regular topic of dicussion both on the internet and face to face with local competitors, namely "How the hell do they do such a bad job of singling out people for enquiries?"

So this guy might get away with the £36 for donkeys years, or there might be a letter on its way to him or her already.......

paulwellerfan

my friend claimed in excess of over 10,000 ( mind you she is a foster carer)

chrismac1

Note that foster carers have a completely different setup. Generally they can claim 200 per week for each child under 11, 250 for each one over 11. This is total cost - so use of own house plus clothing plus food plus Christmas pressies plus Uncle Tom Cobbley. In short, the foster carer angle has no relevance to this thread, albeit it's interesting.