Personal tax self assessment - Can I offset a new office?

ricky43_2

Hello all,

I've had a skim through this forum and Google, but I'm finding it really hard to find information relating to me, most the information seems to relate to being self employed or a limited company director.

I'm a PAYE earning more than £100k from a single stream with 0 personal allowance. I have to complete a self assessment every year, and I usually just put in what I earned and what I paid in tax, very basic.

Before I approach a personal tax accountant, what I want to know, is it worth it?

For example, like most, I'm now working from home 100% of the time. I've just spend around £40,000 on a new garden building, of which, 50% of it will be solely for my office, no benefit-in-kind, it wont be used for anything else.

Do you know if, for example, I can reduce my tax bill by putting some of the construction costs of this office on my self assessment? Or are there any other tips I should be approaching an accountant about? One of the questions I will ask is about pension contributions, as this all confuses me too.

Thanks!

Dazed_and_C0nfused

Others will no doubt comment about the home office (was it necessary for you to do your actual job???)

Pension contributions are usually very tax efficient in your situation but the need to include them on a Self Assessment return all depends on the method used to contribute.

The usual methods are net pay or relief at source.  There's also salary sacrifice but that is where you don't actually contribute, you agree to a lower salary in return for your employer contributing more. 

What method(s) are you using?

ricky43_2

Dazed_and_C0nfused said:

Others will no doubt comment about the home office (was it necessary for you to do your actual job???)

Pension contributions are usually very tax efficient in your situation but the need to include them on a Self Assessment return all depends on the method used to contribute.

The usual methods are net pay or relief at source.  There's also salary sacrifice but that is where you don't actually contribute, you agree to a lower salary in return for your employer contributing more. 

What method(s) are you using?

Hello, yes, my house doesn't really have the space for me to be taking up a whole room. I work with some quite sensitive information too, so it's not a job that can be done at the dining room table, or in Costa, a dedicated space is required.

Re: Pensions. I currently have the typical salary sacrifice. My company pays up to X% and I can choose whatever % I want to pay out of my pre-tax earning. I'm guessing if I do it this way, it will reduce my annual income so wouldn't need to be recorded on a SA.

Dazed_and_C0nfused

Correct, there is no pension tax relief with salary sacrifice as they are employer contributions.

You benefit by having less taxable income to pay tax and NI on in the first place.

Grumpy_chap

ricky43_2 said:

Hello all,

I've had a skim through this forum and Google, but I'm finding it really hard to find information relating to me, most the information seems to relate to being self employed or a limited company director.

I'm a PAYE earning more than £100k from a single stream with 0 personal allowance. I have to complete a self assessment every year, and I usually just put in what I earned and what I paid in tax, very basic.

Before I approach a personal tax accountant, what I want to know, is it worth it?

For example, like most, I'm now working from home 100% of the time. I've just spend around £40,000 on a new garden building, of which, 50% of it will be solely for my office, no benefit-in-kind, it wont be used for anything else.

Do you know if, for example, I can reduce my tax bill by putting some of the construction costs of this office on my self assessment? Or are there any other tips I should be approaching an accountant about? One of the questions I will ask is about pension contributions, as this all confuses me too.

Thanks!

For PAYE, there is no (realistic) possibility to offset the office costs against tax. 

Someone may comment about doing a "calculated" WFH claim but I'd be surprised if you could get an Accountant to actually agree that can be applied for this and gladly put their PI cover behind your tac return.

You can, of course, claim the standard WFH allowance:
https://blog.moneysavingexpert.com/2020/04/martin-lewis--working-from-home-due-to-coronavirus--claim-p6-wk-/

Obviously, you say you have "just" spent the £40k on the office, in which case it would not be for the tax return you are doing now (covers up to FY end April 2021) - the "just" spent would fall into your next tax return (covers FY end April 2022) and that means you have the time to check all the details about any options to claim the office cost.  I still don't think this is a realistic possibility.

Jeremy535897

To claim any costs for working from home, your employment terms must require you to work from home. If that was the case for any part of the tax year, you can claim the standard £6 a week.

Capital allowances on buildings are not available to employees. There are complex rules around whether a building, or parts of it, can qualify for plant and machinery allowances, but it is very difficult to claim as an employee. As the amounts are substantial, it might be worth talking to an accountant, but don't get your hopes up.