Self Emplyoyed v Ltd Company

Skinnylatte

Well done making such a great profit!

I have a limited company, I do my own books and VAT returns, VAT is really easy, just putting numbers in boxes. I use quick books and it generates all the numbers for me.

I pay my accountant £600 a year to do the end of year stuff, keep companies house happy and for general tax advice. Like he told me I can claim £100 a month expenses for working from home :j

Good luck

TheCyclingProgrammer

Skinnylatte wrote: »

I pay my accountant £600 a year to do the end of year stuff, keep companies house happy and for general tax advice. Like he told me I can claim £100 a month expenses for working from home :j

Good luck

On what basis did he tell you that? That sounds very questionable to me.

Employees are allowed to claim £4/week for use of home, no questions asked.

Otherwise, you're allowed to claim additional costs incurred as long as you have evidence. This would typically be the extra cost of utilities like gas and electric but you cannot claim for a proportion of fixed costs like rent/council tax/mortgage interest etc. Only if you're self employed can you do this as the rules are different.

Skinnylatte

TheCyclingProgrammer wrote: »

On what basis did he tell you that? That sounds very questionable to me.

Employees are allowed to claim £4/week for use of home, no questions asked.

Otherwise, you're allowed to claim additional costs incurred as long as you have evidence. This would typically be the extra cost of utilities like gas and electric but you cannot claim for a proportion of fixed costs like rent/council tax/mortgage interest etc. Only if you're self employed can you do this as the rules are different.

My company is a limited company and I can therefore charge it rent for the use of my own home, he said £25 a week was a reasonable amount.

zygurat789

Skinnylatte wrote: »

My company is a limited company and I can therefore charge it rent for the use of my own home, he said £25 a week was a reasonable amount.

It all depends upon what you are doing "at home". If it is just an administrative office facility then it would, at first sight, appear to be a bit OTT. If you have (say) an annexe hiouising a couple of other people involved in doing what you do then it becomes more reasonable.

WHA

I know that the following HMRC guidance relates to self employed, not limited company directors, but it is useful as a guidance as to what HMRC regard as "reasonable" for using your own home for business purposes:-

https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

25 to 50 hours per MONTH £10
51 to 100 hours per MONTH £18
101 and more hours per MONTH £26

If you're claiming £25 per WEEK, then HMRC could well challenge you and expect you to be able to come up with some detailed and robust calculations to show that your EXTRA costs of working from home (extra electric, gas, insurance, etc) are indeed £25 per week.

If, as you suggest, you are claiming £25 per week "rent" then you need to be declaring this on your personal tax return as it's additional personal income, against which you can claim the proportion of associated costs, (including fixed costs in the case of a formal rental) but again, you need to be able to provide calculations of those costs and also some kind of written agreement between yourself and your company confirming the terms of the lease (or licence to occupy) part of your home.

I'm not saying £25 pw isn't acceptable - it may well be. I've certainly had clients claim far more, sometimes several thousand per year, but you need to have calculated it on the proper basis, using rules set by HMRC and being able to justify your apportionments of costs of basis of usage, i.e. number of rooms used partly/wholly for business as a proportion of total rooms in the house and also the time spent using those rooms, again as a proportion of total house usage.

If you're just doing a bit of admin/book-keeping for a few hours per week from the dining room table, and do most of your "real work" on site at client's premises or elsewhere, then you are effectively limited to the standard £4 per week. You'd have a major task trying to persuade HMRC that anything more is reasonable.

You may well have all this covered, but I feel it vitally important to make it clear to other people who may be reading this thread that it isn't "open season" to claim £25 per week- there are implications and hoops to jump through, which I'm sure (I hope) your accountant has properly covered.

purdyoaten

Skinnylatte wrote: »

My company is a limited company and I can therefore charge it rent for the use of my own home, he said £25 a week was a reasonable amount.

Did he also tell you the other bit? You know - that you have to delare this rental income that you receive on your personal tax return?

antrobus

purdyoaten wrote: »

Did he also tell you the other bit? You know - that you have to delare this rental income that you receive on your personal tax return?

Or even the bits about the possibility of (a) a CGT liability or (b) a charge for business rates?

It all depends on the exact circumstances of course. But those are the kind of thing you have to think about.

chrismac1

On the subject of the last post, name ONE case where there was EITHER a successful CGT charge or a charge to business rates. As long as the charge roughly follows the HMRC webpage on the subject there should be no problem.

Naturally this webpage is confusing and mutually conflicting - it was written by HMRC, what did you expect? So choose the most favourable interpretation for your circumstances and go with it.

http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm

antrobus

chrismac1 wrote: »

On the subject of the last post, name ONE case where there was EITHER a successful CGT charge or a charge to business rates. As long as the charge roughly follows the HMRC webpage on the subject there should be no problem.

Naturally this webpage is confusing and mutually conflicting - it was written by HMRC, what did you expect? So choose the most favourable interpretation for your circumstances and go with it.

http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm

On the subject of the last post, obviously if the charge roughly follows the HMRC webpage on the subject there should be no problem.

Clearly in the case of the poster concerned, no one can say whether or not the amount of "£25 a week" that their accountant says was a "reasonable amount" was indeed roughly calculated in accordance with guidance issued by HMRC. But obviously, in the context of a discussion taking place on an internet forum regarding the question of 'business use of the home', a statement by one individual that 'my accountant says its OK to claim £1300 a year' should indeed be qualified, just in case anyone else happens by and thinks that's perfectly OK without even thinking about it.

It all depends on the exact circumstances.

chrismac1

So that was ZERO cases you have named then.