rental income tax confusion

lovinituk

A friend of mine who used to run his own business (sole trader) was really pleased one day because he said he'd just got a free iphone. He had bought it through the business and thought because it was an expense he had got it free because of the tax saving. He thought he saved the whole amount of the cost of the expense rather than the actual tax saving of 20%. He was mortified when it was explained to him as he'd been buying all sorts of things through the business thinking he was getting them all for free!

antrobus

jt2007 wrote: »

....1. I am also told I can claim using my home as an office at a cost of £208 a year......

As a general rule, yes.

Including the 'business use of home' as an expense is fairly standard. The £208 a year figure arises because employees are allowed to claim £4 per week as an expense without providing any records. Therefore as a matter of practice, HMRC do not tend to ask any questions if the self-employed take that as a hint.

https://www.gov.uk/tax-relief-for-employees/working-at-home

jt2007 wrote: »

.....but im confused as to whether shelves etc constitute a repair or part of my 10% furnishing claim

That would depend on whether or not the shelves and lampshades are "fixtures that are an integral part of the buildings". I'd have thought - 'certainly not' for lampshades, and 'depends' for the shelving.

http://www.hmrc.gov.uk/manuals/pimmanual/pim3210.htm

CLAPTON

jt2007 wrote: »

because paying an agency would have saved me time and I could have paid less tax so the overall agency cost wouldn't be as much as I thought. but as lovein said I still would have paid a few hundred ao yes I actualky am glad I did it myself. just with a newborn and full time work sometimes im regretful of when I dont save time but iverall im glad for saving money

depending upon your tax rate you either pay 80% of the agency fee or 60% : still seems worth saving

Savvy_Sue

My gut feeling is that a good agency will save you time, and your time must be worth something to you. A poor agency will save neither time nor money, so before / when this tenant goes, you might want to look around, talk to other landlords etc.

My bil has a buy to let with a friend. They spent far more time and money doing it up before renting it out than they anticipated. Then when their first tenant left they spent a whole lot more time and money redecorating and doing a few improvements. They don't use an agency, but then bil doesn't have a partner or children to worry about, so if something goes disastrously wrong at 3 am he can deal with it (hasn't happened so far!)

If they did use an agency, presumably they'd have the choice of whether to do the redecorating or repairs themselves, or let the agency sort it out. Also the agency would do ID checks, take up references, hold the deposit and return it or not etc. Goodness knows they charge tenants enough for those services, you'd hope it's of some benefit to landlords!

jt2007

guys thank you all for your help. this has so far been very informative for me.
I think in summary I would have been confident claiming £208 a year ago for home as an office BUT I think now with the hmrc saying minimum hours are needed I would not be confident. I still have time to change my mind based on antrobus saying its an accepted figure without proof being needed. so I am tempted but I guess with these new minimum hours being applied no one has really put tjat to the test yet making it a gamble