work from home - rent & tax as allowable expenses

shelleywa

Hi folks,

Having read the following pages from the HMRC website, I am a bit confused as to what portion of my rent/council tax is allowable. I rent a 1 bed house (Band A with single occupancy discount). It has a bedroom, living room, kitchen and bathroom. I have turned the bedroom into a dedicated treatment room for my Massage Therapy business (I sleep on a sofa-bed, which is obviously a sofa for when clients come round).

At the moment, the business is in its infancy and I am working it around a full-time job, so I will only have 1-2 clients per week to start, which will (hopefully!) increase steadily over time.

So what percentage can I claim as allowable??

http://www.hmrc.gov.uk/manuals/bimmanual/BIM46840.htm

http://www.hmrc.gov.uk/manuals/bimmanual/BIM47820.htm

Thanks for any help on this!

phill99

My accountant just puts a weekly figure of £25 to cover the housing costs associated with running my business from home. That covers heating, electricity, washing of work clothes etc.

This is a reasonable figure and has never been questioned by HMRC. You may need to try for a higher figure as you have people visiting you.

HappyMJ

I have also wondered what is a reasonable figure. I claim £50 a week as a business expense for the premises. £30 as rent for the room for the home office (used 40 hours per week and for no other purpose - rent is £129 a week) and £20 a week (half) towards the gas (£55 a month), electric (£45 a month), water (£25 a month), landline rental (£15 a month) and broadband (£25 a month) and I thought that was fair but now they are questioning it. If I rented the room out to a lodger I would rent it out for £70 a week including the above bills.

LianneCarlaS

If the room is wholly and exclusively for the use of the business then you could apportion the expenses based on floor space. The room size should be in with your documents for the house.

You take the amount billed and divide it by the size of the house which gives you the amount of the bill owed by each sq ft/ sq m of the house. Then simply multiply it by the size of the room.


The alternative is to apportion the expenses by labour hours and divide the bill into 168 and then multiply that by the average number of hours per week you work. It doesn't matter if the bill is for a week, month or quarter as all you are looking for is the percentage of time that your property is in use as a business.
e.g a 40 hour week means bills are £ divided by 168 multiplied by 40 which is equal to £ multiplied by 0.238
129*0.238 = 30.70 rent per week
plus
165*0.238 = 39.27 bills per month = £9.13 per week

Now if your landline and broadband belonged just to the business that would be £40 per month and then apportion the remaining between business and personal 125*0.238 which is £29.75 bringing your monthly bills to a total of £69.75 = £16.22 per week

Even if you do all your bookkeeping yourself it is worth getting in an expert for things such as this. Great to have a basic understanding of everything though

antrobus

You've turned the only bedroom in your home into a "dedicated treatment room" for "Massage Therapy"? Do you have planning permission? What do you think the neighbours will say when that 1-2 clients per week becomes 10, 20, or more?

Seriously, you can't run a massage therapy business from home without planning permission, and you won't get planning permission to use the only bedroom in the property as a dedicated treatment room. You need a Plan B to cope with the eventuality that the enforcement officer from local planning comes knocking at the door and issues a stop notice.

property.advert

antrobus wrote: »

You've turned the only bedroom in your home into a "dedicated treatment room" for "Massage Therapy"? Do you have planning permission? What do you think the neighbours will say when that 1-2 clients per week becomes 10, 20, or more?

Seriously, you can't run a massage therapy business from home without planning permission, and you won't get planning permission to use the only bedroom in the property as a dedicated treatment room. You need a Plan B to cope with the eventuality that the enforcement officer from local planning comes knocking at the door and issues a stop notice.

More likely a visit from the Vice Squad !

Savvy_Sue

antrobus wrote: »

You've turned the only bedroom in your home into a "dedicated treatment room" for "Massage Therapy"? Do you have planning permission? What do you think the neighbours will say when that 1-2 clients per week becomes 10, 20, or more?

Seriously, you can't run a massage therapy business from home without planning permission, and you won't get planning permission to use the only bedroom in the property as a dedicated treatment room. You need a Plan B to cope with the eventuality that the enforcement officer from local planning comes knocking at the door and issues a stop notice.

I thought I had raised similar issues in a different thread, but maybe it wasn't this OP but another ...

Anyway, while I know this isn't what the OP was asking, I do hope that she has permission from her landlord to run a business from home, especially one where clients are coming to the home. It's almost always a clause in the tenancy agreement, and while permission isn't automatically refused by social landlords, a business of this kind might well NOT be allowed, because of visitors coming to the home. If there are any parking issues, it's almost certainly going to be refused.

If it's a private tenancy, and the landlord has a mortgage, then they may have a clause in their mortgage agreement to say that they won't allow a business to be run from the address.

Insurance is another issue too, covering visitors to the property. And so on.

To move away from the negativity, one possibility is to visit clients in their own home, or to rent a treatment room for a limited period - which might make advertising easier if there are other practitioners operating there.

shelleywa

Well, (apart from those 2 people who are shooting me down in flames without ANY accompanying constructive criticism), thanks for taking the time to reply to my post. And to those above-mentioned people:

1. I rent from a private Landlord who not only knows about my business venture but is also very supportive of it
2. I'm never going to have that many people coming to my house in a week. I still have a full-time job. This set-up is just until I can afford to rent a premises elsewhere. I am also a mobile therapist

Thank you also to those people who answered my original question.

steve1980

shelleywa wrote: »

I rent from a private Landlord who not only knows about my business venture but is also very supportive of it

He may be supportive but he is not the one that will get the notice to stop from the Council, you are!

They will also charge you business rates, and any contents/buildings insurance will be null and void.

LianneCarlaS

If you have a client base then you need to find a salon to rent a room from even if you start off just doing it on a Saturday whilst you are in full time work. Don't touch a penny of the profit and build yourself a safety margin so you can move to part-time or leave you job knowing that you have a little in order to be able to survive.

I really can't imagine who would visit someones house for a massage, especially a bedroom. If it was a dining room that had been converted then maybe at a push (and it would be a big push)

shelleywa

LianneCarlaS wrote: »

I really can't imagine who would visit someones house for a massage, especially a bedroom. If it was a dining room that had been converted then maybe at a push (and it would be a big push)

FYI, It's actually very common in the holistic therapy field to turn a room in your house into a dedicated treatment room. And why "especially a bedroom"? - a room is just 4 walls, no matter where it is in your house?? My 2 main competitors both have this setup and they've been up and running for 20+ years so must be doing something right. :j

However, thank you for your advice on the salon option.