Electricity bill _ Ltd company

TigSave22

HI there,

My otherhalf and I run a small business (Ltd company). The office is at home. We have only been claiming the standard weekly working from home rate (£5/week?), but with the increase in electricity prices we need to think of solutions.

We have a server stack for business use only. With the new electricity prices, it will cost us £350/month just for the servers...

Is there a way where we can use an inline electricity monitor and claim the electricity as an expense (and not claim the standard £5/week)?

Many thanks,

Jeremy535897

The standard deduction for working at home (£6 a week, not £5) cannot apply to you, because you cannot require yourselves to work from home. What you should be doing is recharging the company for any expenses you personally incur that it should bear. The company claims a corporation tax deduction for any allowable amounts paid to reimburse you.

400ixl

Any reason you are not running that server stack in a cloud environment which will possibly cost less than the electricity bill?

TigSave22

@Jeremy - Regarding the £6 (yes, you are correct) /week - this has been on the advice of our accountancy firm.  So that gets added as a company expense (I think?..). Not quite sure how it is managed, but I will check with them again, and also clarify with them that we are truly eligible for this. 
Regarding other expenses being reclaimed, yes, that is how we manage all other expenses made on behalf of the company. This is just a tricky one as the accountancy firm said we can not claim electricity back as a company expense as it is not on a separate bill, but logic tells me that if we can prove our electricity use for the company I. e. smartplug inline with the server stack in combination with our electricity bills, then that should surely be enough proof to HMRC if we were ever to be audited.

If this is not possible, then that is fine, I was really just looking for more opinions as I know our firm can sometimes edge on the more Conservative side. Although I do not want to step over the line, I certainly do not want to foot this bill personally if it is possible to reclaim.

@400ixl - we did look into a cloud solution, but due to high CPU/memory demand and the fact that we need console access, cloud storage was a substantially more expensive solution/not a good fit for our needs.  I do think that our last quote would have been cheaper with the new electricity costs, but that would also just have been a question of time before the hosting costs will reflect the higher elec prices. 

Jeremy535897

I assume the server stacks are owned by the company? In that case, in my view, you are entitled to charge the company for the expense you pay personally. I wonder whether your accountant is saying that the company cannot recover the VAT on the electricity because the bill is to you? That is of course correct, but millions of employees recover money spent on subsistence and accommodation, for example, from their company employer, when the bill is addressed to them personally, and the company claims for the cost of reimbursing them.

The technical data on the server stacks will tell you what power they consume, so that is what you recharge for that electricity, and you have supporting evidence should you need to provide it.

TigSave22

@Jeremy, thank you for your response.  Yes, not being able to reclaim the VAT makes complete sense.

I will follow up with them on Monday, hopefully we can agree on a way forward as the servers belong to the company and fills a clear business need.

prowla

TigSave22 said:

HI there,

My otherhalf and I run a small business (Ltd company). The office is at home. We have only been claiming the standard weekly working from home rate (£5/week?), but with the increase in electricity prices we need to think of solutions.

We have a server stack for business use only. With the new electricity prices, it will cost us £350/month just for the servers...

Is there a way where we can use an inline electricity monitor and claim the electricity as an expense (and not claim the standard £5/week)?

Many thanks,

There should be a raft of items you can claim from the Ltd Co for running things from the house; the accountant should be able to advise on this.

Note, though, that if you do claim those costs, you will then not be able to also get the working at home tax relief, as they will include the expense which the claim is there to offset against.

Actually, it is questionable whether you could claim the working at home tax relief if you're working at the company address?

400ixl said:

Any reason you are not running that server stack in a cloud environment which will possibly cost less than the electricity bill?

It may or may not be the case that running in the cloud will reduce costs; typically a like-for like always-on compute platform will cost more.

You can reduce costs by scaling up & down based on what's needed at a given time (ie. autoscaling), but you then have the cost of developing the solution, which needs (expensive) expertise.

You also have to factor in the cost commitment of the physical servers purchase & lifespan against binning them for a new implementation, ie. if they're in year 2 of a 4 cost plan, then would vacating them simply leave a white elephant there costing money? (Of course, the accountant should hopefully be factoring in annual depreciation costs against the kit into the company accounts.)