Is a limited company the way to go if mixing an existing job with self employment?

Jeremy535897

If about a quarter of the property is used for B&B, then about a quarter of all maintenance costs will be allowed (unless capital). Deductions for water, power etc will depend on the split of usage between business and personal.

tightauldgit

chilswelluk said:

tightauldgit said:

When you say you 'run a B&B' do you mean you rent out rooms in your house or it's a completely separate property? Who owns it? 

If you can get the work done and spend the cash in the same tax year its maybe less of an issue

Yes I rent out rooms in my house and own the house in my own name.  The house has a residential mortgage, but I have written clarification from the mortgage company that as long as I continue to live in the house as my main residence, then I don't need a commercial mortgage and can continue running the business as it is.  I do have barns etc that I could convert to independent accommodation, but that would not be classed as a repair and would not be eligible for a tax offset, therefore it would not be worth me doing.  Therefore tax offsetting from profits will be confined to repairs and anything else that is eligible. 

For simplicity of accounting I would plan to spend cash in the same tax year.  Apart from "repairs", there are green energy schemes etc that I can use to offset tax. So I can't ever see the company making a profit and having to pay tax.

Have you spoken to an accountant about exactly what you can and can't claim? I'm no expert but I can't see that you would be able to claim the expenses for fixing the roof of your house as a business expense for the B&B. Otherwise it just seems like a massive tax fiddle that anyone could claim their house is a B&B and benefit from. 

chilswelluk

I'm no expert but I can't see that you would be able to claim the expenses for fixing the roof of your house as a business expense for the B&B. Otherwise it just seems like a massive tax fiddle that anyone could claim their house is a B&B and benefit from. 

The roof in question is an annex that the B&B operates in.  The room is solely used for B&B and needs to be repaired.  Also not everyone can claim their house as a B&B.  In accordance with the new Scottish licensing scheme, I have had to go through an arduous process to get a license to run the B&B.

chilswelluk

daveyjp said:

You can still do what you are suggesting without having a Ltd company.

Your annual tax return would include B&B business income and expenditure.

But say if I don't manage to offset all the profits, I would be taxed at a rate of 42% as a sole trader on profits.  This is because my existing employment would take me over the threshold very quickly.  Whereas if I had a limited company, any profits would only be taxed at 19% for corporation tax if under 50k.  This is a massive difference in tax.

chilswelluk

Grumpy_chap said:

FWIW - I don't think I could run a B&B plus a full time job.

Why not, it's a doddle of a business.  Probably one of the easiest businesses I have run.  Demand way outstrips supply with zero time spent marketing etc.  All business comes via Airbnb and booking.com.  I have multiple sets of clean sheets to change everyday and do all washing at the weekend.  Breakfast is self service continental.  Why other owners bother doing a full cooked breakfast etc is beyond me, where customers will pay the same price for a basic breakfast.  Keep it simple and basic and the margins are good.