Self employed working from my parents house

ac19

Hi, I’m wondering if any one could offer a bit of advice.
I’ve recently set up my own business working self employed but from my parents home where I also live. I (kindly) do not currently pay anything towards my parents for this. I’m a year away from submitting my first self assessment form so asking in advance. I’m confused as to whether any utilities or rent(if they charge me in the future) can be claimed as an expense for my self assessment? If they did what impact would it have on their tax?
Worth knowing about if it means saving a few pounds…legally and ethically of course

Jillanddy

Have your parents considered that the use of a domestic property for business purposes may impact on their council tax and on their home insurance? Amongst other things. And certainly if they charge the business for costs, that is an income stream which hugely complicates many for matters for them than saving you a few quid. And that legally, nothing to do with ethics. It just isn't, legally speaking, as easy as "setting up a business at home" - you and they need to take great care because you could fall foul of many restrictions in a variety of areas.

ac19

Jillanddy said:

Have your parents considered that the use of a domestic property for business purposes may impact on their council tax and on their home insurance? Amongst other things. And certainly if they charge the business for costs, that is an income stream which hugely complicates many for matters for them than saving you a few quid. And that legally, nothing to do with ethics. It just isn't, legally speaking, as easy as "setting up a business at home" - you and they need to take great care because you could fall foul of many restrictions in a variety of areas.

Council have already been contacted regarding permissions, what is and isn’t allowed ect, no direct mention on council tax, what would be affected by that? The business is a private home gym offering pt sessions. Everything we’ve done so far we think we’ve done correct. Insurance, pt lisence, music lisence ect. It’s just the tax side we are a little grey on.

CIS

ac19 said:

Jillanddy said:

Have your parents considered that the use of a domestic property for business purposes may impact on their council tax and on their home insurance? Amongst other things. And certainly if they charge the business for costs, that is an income stream which hugely complicates many for matters for them than saving you a few quid. And that legally, nothing to do with ethics. It just isn't, legally speaking, as easy as "setting up a business at home" - you and they need to take great care because you could fall foul of many restrictions in a variety of areas.

Council have already been contacted regarding permissions, what is and isn’t allowed ect, no direct mention on council tax, what would be affected by that? The business is a private home gym offering pt sessions. Everything we’ve done so far we think we’ve done correct. Insurance, pt lisence, music lisence ect. It’s just the tax side we are a little grey on.

It's the valuation office, not the council who would make the decision on domestic v non-domestic.

Where part of a property goes beyond general domestic use and in to business use the valuation office may rate that part of the property for business rates, but it depends on a few factors.

lincroft1710

Is this home gym in a dedicated room, or do you use (for example) a bedroom, which reverts to a bedroom at the end of your working day?

ac19

lincroft1710 said:

Is this home gym in a dedicated room, or do you use (for example) a bedroom, which reverts to a bedroom at the end of your working day?

It’s the basement on the property, was already there and only cosmetic changes done to it. Last person we spoke to was a planning officer.

Sandtree

ac19 said:

lincroft1710 said:

Is this home gym in a dedicated room, or do you use (for example) a bedroom, which reverts to a bedroom at the end of your working day?

It’s the basement on the property, was already there and only cosmetic changes done to it. Last person we spoke to was a planning officer.

Given you have a dedicated space and clients visiting there is a risk of it needing planning permission to change the use and have an impact on council tax/business rates 

As to what expenses you can offset against revenues, its only those that are genuinely incurred as a result of your business and HMRC are well aware of the tricks of renting from family etc.  So if your parents were to charge you for your use of water then you could charge your business about 3p per 10L of water it consumes... similar for each LED light bulb its about 3p per 10 hours. 

The likely reality is that they are charging you no more for living there without using the basement than they do for you using the basement and therefore there is no cost to charge the business.

General_Grant

Sandtree said:

ac19 said:

lincroft1710 said:

Is this home gym in a dedicated room, or do you use (for example) a bedroom, which reverts to a bedroom at the end of your working day?

It’s the basement on the property, was already there and only cosmetic changes done to it. Last person we spoke to was a planning officer.

Given you have a dedicated space and clients visiting there is a risk of it needing planning permission to change the use and have an impact on council tax/business rates 

As to what expenses you can offset against revenues, its only those that are genuinely incurred as a result of your business and HMRC are well aware of the tricks of renting from family etc.  So if your parents were to charge you for your use of water then you could charge your business about 3p per 10L of water it consumes... similar for each LED light bulb its about 3p per 10 hours. 

The likely reality is that they are charging you no more for living there without using the basement than they do for you using the basement and therefore there is no cost to charge the business.

According to the OP, nothing is being charged for living there.  Perhaps they could charge under £1K/year without needing to declare to HMRC.

Sandtree

General_Grant said:

Sandtree said:

ac19 said:

lincroft1710 said:

Is this home gym in a dedicated room, or do you use (for example) a bedroom, which reverts to a bedroom at the end of your working day?

It’s the basement on the property, was already there and only cosmetic changes done to it. Last person we spoke to was a planning officer.

Given you have a dedicated space and clients visiting there is a risk of it needing planning permission to change the use and have an impact on council tax/business rates 

As to what expenses you can offset against revenues, its only those that are genuinely incurred as a result of your business and HMRC are well aware of the tricks of renting from family etc.  So if your parents were to charge you for your use of water then you could charge your business about 3p per 10L of water it consumes... similar for each LED light bulb its about 3p per 10 hours. 

The likely reality is that they are charging you no more for living there without using the basement than they do for you using the basement and therefore there is no cost to charge the business.

According to the OP, nothing is being charged for living there.  Perhaps they could charge under £1K/year without needing to declare to HMRC.

Depends what the parents do etc, they may already be filing tax returns in which case even if its 10p a month in theory it needs to go on there however I am sure even those parents that charge their kids more than £1k a year dont declare it. Mine did and never did a tax return in her life. 

My point however is that there are plenty of tax dodges paying relatives, especially if they have personal allowances spare, and so if they continue to live there rent free it'd be hard to justify why use of the basement attracts costs and especially if they are not inline with market rates... if they have to start paying rent for both parts the question will be what delta the basement is making and is that real or just made up to evade tax.

lincroft1710

ac19 said:

lincroft1710 said:

Is this home gym in a dedicated room, or do you use (for example) a bedroom, which reverts to a bedroom at the end of your working day?

It’s the basement on the property, was already there and only cosmetic changes done to it. Last person we spoke to was a planning officer.

I will assume that it is a dedicated space and thus it could be liable for non domestic rates. The Valuation Office Agency is the body responsible for making the decision.