Query on elec and gas usage

Lifeisbutadream

I am a partner in a small business, I do all the books etc.

I have been using an accountant and although she is very cheap (£200 per year), I seem to be doing most of the work myself (I keep computer records of all expenses and invoices), so I was thinking of not using her this year.

My questions are:

1. What can I claim for electric/gas/water etc. (if any) - I use an office in my home and OH uses electric in the garage when he is machining or making anything

2. We have a business van, I presume that we can claim all expenses for this. We also use the car mainly for the business (pricing, collecting materials) I would say 80% of the car use is for the business. How do I show this? Also car/van tax - can I claim against this?

3. We have a separate phone line in the office - I presume we can claim full amount for this? Also we both have mobiles for business use only (we have a third mobile for personal use) - can we claim full amounts for both mobiles?

4. Any goods bought that are not consumable - is it 50% this year, then 25%, then 25%?

Thanks in anticipation.

Bean_Counter

Hi,

Ther are some useful threads in the tax section such as

http://forums.moneysavingexpert.com/showthread.html?t=434071

which contains lots of info & links elsewhere that might be useful.

Also have a look at the following for claiming home costs.

If there is only minor use, e.g. writing up the business records at home, you may accept a reasonable estimate without detailed enquiry. The following examples are a guide only and intended to demonstrate the principles to be applied; each case will be dependant on the facts (http://www.hmrc.gov.uk/manuals/bimmanual/BIM47825.htm).
Example 1. Angela writes up her business records at home. She uses a room solely for business purposes for a short period each week. She estimates that £104 covers the cost of the proportion of the establishment costs, plus the electricity for heating and lighting.
Although the claim for £104 is obviously an estimate of £2 per week, the claim is small and reflects the facts of the case. It is a reasonable estimate of the expense incurred. No enquiries are necessary.
Example 2. Bill runs a small business. He uses one small room at home as an office, exclusively for the purposes of his trade. The room represents 5% of the floor area of the house. His Council Tax, insurance and mortgage interest bills total £4,500. He claims 5%; £225. His electricity bill for heating and lighting is £300. He claims £15, which is 5% of the total. His total claim is £240 (plus the business proportion of his phone bill). Although Bill has apportioned his electricity bill by floor area rather than usage, the amount claimed is small and there is nothing to suggest that his business use is significantly greater or lesser than his private use. It can be accepted as a reasonable estimate.
Example 3. Bert runs a small business. He uses the spare bedroom at home as his office except for a week at Easter and a week at Christmas. All he does is write up his records, once a week. The house has ten rooms. Bert calculates that his business expense, based on 1/10 of the total costs would be £450. Bert recognises that this is far too much for what he actually does at home. Bert estimates that £104 covers the cost of the proportion of the establishment costs, plus the electricity for heating and lighting. Although the claim for £104 is obviously an estimate of £2 per week, the claim is small and reflects the facts of the case. It is a reasonable estimate of the expense incurred. No enquiries are necessary.
Example 4. Chris is an author working from home. She uses her living room from 8am to 12pm. During the evening, from 6pm until 10pm, it is used by her family. The room used represents 10% of the area of the house. The fixed costs including cleaning, insurance, Council Tax and mortgage interest, etc. total £6,600. A tenth of the fixed establishment costs is £660. For the purposes of fixed costs, one sixth (4/24) of the use by time is for business, so Chris claims £110. She uses electricity for heating, lighting and to power her computer, which costs £1,500 per annum. Chris considers an apportionment of these costs by time and area. A tenth of the costs is £150 and half of these costs by time (4/8) relate to business use, she claims £75. She also uses the telephone to connect to the Internet for research purposes. Her itemised telephone bill shows that a third of the calls made are business calls. She can claim the cost of those calls plus a third of the standing charge.
Example 5. The facts are as in example 4. Chris has some work done on the house. She has the exterior painted and at the same time has the dining room redecorated. What, if anything, can she claim as a deduction? The exterior painting is a general household cost. She can claim a proportion based on business use. Chris does not use her dining room for business purposes. The cost of redecorating the dining room is not an allowable expense.
Example 6. Gordon, an architect, dedicates a room solely for use as his office between 9am and 5pm daily. The room contains a workstation, office furniture and storage for his drawings. He uses the room for an average of four hours each day, though often this is spread over his working eight hour day as he has a number of regular site visits to make. In addition, it is not uncommon for Gordon to accommodate clients in his office to discuss plans, outside of normal hours. The room is available for domestic use outside of business hours and his family regularly make use of the room for around two hours each evening.
After apportioning costs by reference to the number of rooms in the house, Gordon calculates the room uses £300 of variable costs (electricity and oil) and £600 of fixed costs (Council Tax, mortgage interest, insurance). In apportioning these costs by time Gordon claims £680 in total, made up of 4/6 of variable costs (£200) and 8/10 of fixed costs (£480). The claim equates to 75% of the total costs attributable to the room (£680/£900), which Gordon views as a more straightforward but equally reasonable basis for future claims, should his circumstances remain unchanged.
Example 7. Bill entertains a number of customers at his home. Each time he hires caterers and also a firm of cleaners. Although Bill has used his home for business purposes, he cannot claim any of the costs as there is legislation that disallows entertaining costs.

Hopefully you can put your situation into one of these contexts.

Having said that, what does your accountant do for £200. If she takes your records, makes them up into a format acceptable to the tax man and deals with your tax submissions, then I would think £200 is an excellent price.

Lifeisbutadream

Our business is a joinery one. OH is the joiner and I do all the book keeping, quoting, invoicing, materials pricing and buying and I am in the office for around 6 hours per day. We dont use the office for anything else as I dont like anyone else to touch anything except me!

I keep all record of expenses etc. so that I know how much we are earning and how much profit we are making. All accountant does it take them away and check them (I presume) and then fill in tax return. I think if I knew what else to claim for I could do this from the information that I have.

£200 is very good - she is a friend - but if I am honest, I am not sure how good she is, which is why I might as well do it myself.

Actually - another question is: because OH often brings potential customers to our house, we are gradually doing it up, floors, doors etc. so taht it shows what we can do. Can we claim against these expenses? I know that we would be subject to capital gains if we built an extension (which we will be soo, to house a larger office ), but can we also do this with decorating the house?

Bean_Counter

Lifeisbutadream wrote: »

Our business is a joinery one. OH is the joiner and I do all the book keeping, quoting, invoicing, materials pricing and buying and I am in the office for around 6 hours per day. We dont use the office for anything else as I dont like anyone else to touch anything except me!

I keep all record of expenses etc. so that I know how much we are earning and how much profit we are making. All accountant does it take them away and check them (I presume) and then fill in tax return. I think if I knew what else to claim for I could do this from the information that I have.

£200 is very good - she is a friend - but if I am honest, I am not sure how good she is, which is why I might as well do it myself.

Actually - another question is: because OH often brings potential customers to our house, we are gradually doing it up, floors, doors etc. so taht it shows what we can do. Can we claim against these expenses? I know that we would be subject to capital gains if we built an extension (which we will be soo, to house a larger office ), but can we also do this with decorating the house?

Sorry, got distracted by your signature, a bottle of wine and Family Guy with the kids!!!

I feel I am straying out of my area of expertise, but I always feel that you should claim what is right - i.e. if you have a room that is used 15% for entertaining customers, then claim that. You are right, it might impact on you CGT - jimmo's the man for that type of question!!!

It is hard to advise what else to claim for without knowing your full circumstances, an advantage your accountant has. If you want to do it yourself, keep it sensible and you'll be fine. I'll help if I can.

Bean_Counter

I had another thought on the CGT front.

As far as I am aware, you would be restricted in claiming private residence relief if part of your home was used exclusively for business use. The answer I would have thought is to say the following. You said you use an office in your home for business. Well, you could say that it is 90% for business and 10% for sorting out household bills & filing etc.

Hence room is not exclusively for business use and no CGT liability.

You could use the same prinicple for the proposed extention, depending on how it is laid out.