Use of home as office

Nio1

Hi,

I have a quick question about how much tax relief (if any) I can claim for the use of a spare room in my home as an office.

My partner and I are employed full time, but also run a small business in our spare time (photography).

We rent a 2 bedroom flat, and use the spare room as an office to run the photography business from (we don't use it for anything else). The business is fairly new so profits are low (net £291.97 for the year ending April 2013).

According to HMRC's website. we can claim a proportion of our rent as an expense on our tax return. The room takes up around a quarter of the flat, so a quarter of the rent paid over the year would amount to £1485.

This would result in our business posting a loss of £1193.03 instead of a profit of £291.97

Is this correct, or does the fact we are both employed full time as well influence the relief we can claim on rent?

Also, if the business makes a loss, are we allowed to claim back overpaid tax (paid through PAYE) from HMRC?

Thanks

morgani

Yes potentially if your calculations are correct. I would avoid 100% use of a room though due to CGT etc. I would adjust the use of that room to reflect the % of time it is actually used for business use so maybe say 50%?
If there is a loss and this is not a ltd co the yes it can be offset against other income in that tax year.

lincroft1710

As you are in a rented flat, you should check that a running a business from the flat does not contravene your rental agreement nor any covenants upon the flat.