New to self-assessment - Accountant advised not to claim for proportion of home used

leawright

My husband became self employed last February and we are completing our first self-assessment. We spoke to an accountant as we thought it may be daunting to do ourselves but I've decided to give it a go.

He said to us that we should not attempt to claim back anything against the proportion of the house used for his business (our spare bedroom) or any council tax or bills, as when it comes to selling our home in the future, a proportion of any profits from any increase in value could be taken. I can't find anything about this online - perhaps I'm not looking in the correct places - but is this true and is there anything I can do to mitigate it other than not claim?

Our electricity, heating and internet costs have substantially increased.

Thanks for any advice!

HappyMJ

leawright wrote: »

My husband became self employed last February and we are completing our first self-assessment. We spoke to an accountant as we thought it may be daunting to do ourselves but I've decided to give it a go.

He said to us that we should not attempt to claim back anything against the proportion of the house used for his business (our spare bedroom) or any council tax or bills, as when it comes to selling our home in the future, a proportion of any profits from any increase in value could be taken. I can't find anything about this online - perhaps I'm not looking in the correct places - but is this true and is there anything I can do to mitigate it other than not claim?

Our electricity, heating and internet costs have substantially increased.

Thanks for any advice!

Yes that would be capital gains tax.

Personally I would just claim for a portion of the bills based on estimates.

You can claim the amounts in BIM75010 without much of an issue http://www.hmrc.gov.uk/manuals/bimmanual/bim75010.htm

It's not very much but it might save you a little bit.

Although a separate claim can be made for mortgage interest as your accountant says I wouldn't due to capital gains tax.

Again same with council tax. You would have paid it anyway but if you had to buy a larger house then your needs to account for the business usage then you could claim but you would open yourself up to a capital gains tax liability.

Why have you internet costs increased? You would probably be on an unlimited plan which costs the same whether you use it for business or not. You can however claim a proportion of the bill.

Me...I claim £10 per month estimating I use the room for around 1.5 hours to 2 hours a day for business purposes saving a whole £2 a month on my self assessment.

[Deleted User]

leawright wrote: »

My husband became self employed last February and we are completing our first self-assessment. We spoke to an accountant as we thought it may be daunting to do ourselves but I've decided to give it a go.

He said to us that we should not attempt to claim back anything against the proportion of the house used for his business (our spare bedroom) or any council tax or bills, as when it comes to selling our home in the future, a proportion of any profits from any increase in value could be taken. I can't find anything about this online - perhaps I'm not looking in the correct places - but is this true and is there anything I can do to mitigate it other than not claim?

Our electricity, heating and internet costs have substantially increased.

Thanks for any advice!

He started last February so only two months accounts to be declared on 2014/15 tax return. To what date are the accounts made up?

chrismac1

Find me one tax case - just ONE - where HMRC has assessed a main residence to capital gains tax on this basis. Note this is about the 5th time over the years I have set down this challenge and I have yet to be given such a case.

Having said that, it is prudent to follow the HMRC guidance on calculating use of own home on their site. And unless you are using the home for business at least 3 hours per working day, £4 per week cannot be argued with.

TheCyclingProgrammer

It would only affect your CGT relief if part of your home had been used exclusively for business.

An example might be a physiotherapist who converts a bedroom into a treatment room.

If the room you use still has some non business use, like a spare room, then I don't think you should worry about this, as chrismac1 says.

Your accountant is right to bring this to your attention but us being overly cautious IMO. A claim for expenses using HMRCs simplified method (flat rate) or based on the proportion of the house used and how long (eg 5 days a week) would be fine.

chrismac1

Tip - I always have a golf club or tennis racket in my spare bedroom a.k.a home office.