Is use of home office a BIK?

[d000hg]

The acceptable level for use of a home office not to be a BIK is £10 month for up to 50 hours work a month from home, up to £26 a month for over 100 hours, and has been for a long time. The fact you've been claiming a lot more for ten years doesn't mean you're right, only that HMRC have just noticed it.

There are other variations - a nice summary is over here.

HMRC have nothing to do with it surely, they just read the paperwork I submit. My accountants have always told me if I can justify the higher figure, it is fine... So are we saying the only change is they listed it on the p11d this time?

[d000hg]

Your accountant is telling you to speak to your accountant

Didn't think they'd be around on a Sunday!

[malvolio]

On the other hand, why wouldn't you claim it? It's as simple as setting up a recurring expense in freeagent (or on the InTouch portal which the OP is using).

Your £216 probably bumps up to more than an average day's rate by the time you factor in higher rate tax. On a 20 year contracting career, that's a month's billing!

Over my 22 year contracting career to date I would have earned £4752, free of tax (which is rather the point of the original question...), or roughly 0.2% of my gross or perhaps 0.4% of my net at best.. Somebody else had a go about not claiming lunch, worth around 95p a day in saved taxes. So it's neither here nor there really, I simply can't be bothered with such trivial amounts, life's too short.


My accountants have never complained either. Funny that...

[TheCyclingProgrammer]

HMRC have nothing to do with it surely, they just read the paperwork I submit. My accountants have always told me if I can justify the higher figure, it is fine... So are we saying the only change is they listed it on the p11d this time?

Stuff reported in box N is normally non taxable but traditionally, the payment made by YourCo is treated as taxable earnings which you would then offset with a claim for business expenses on your tax return, cancelling out the P11D figure. Box N would be used for payments for things like business calls, travel and subsistence etc.

In the past you had to go through this rigmarole unless you had a dispensation but most of these expenses are now covered by exemptions which means they should not appear on your P11D at all.

Use of home payments are exempt anyway and should not appear on your P11D however as has been stated you should either be paying yourself £4/week or the actual additional costs you’ve incurred if you have evidence.

You cannot simply claim a flat rate of £50/month or some other arbitrary proportional amount like you can if you’re self employed. That’s not the way it works. Strictly speaking the £50/month should be treated as taxable earnings. See the last section here:

https://www.gov.uk/expenses-and-bene...report-and-pay

If HMRC ever check your return and you can’t provide evidence that your additional costs were at least £50/month then you will be liable to tax and NI on the excess amounts.

[Lance]

HMRC have nothing to do with it surely, they just read the paperwork I submit. My accountants have always told me if I can justify the higher figure, it is fine... So are we saying the only change is they listed it on the p11d this time?

the change might be more down to you not needing to issue a P11d UNLESS you have any BIK payments now.
So if you do one then HMRC will be looking for the BIK and then changing your tax code.
I reckon anyway.

[TheCyclingProgrammer]

Just to add - even if the stuff in Box N is a legitimate expense, the reason why it would often result in a tax code change is due to the timing difference between when HMRC receive your P11D and your self assessment. The P11D doesn't give any indication to HMRC *what* the stuff in Box N is for, therefore it's treated as a BIK and often generates a tax code change - it's not until they receive your tax return with a claim for business expenses that they know there's no actual taxable BIK. This is one of the reasons why exemptions were introduced in favour of dispensations for common employee business expenses.

[d000hg]

I'm fairly sure I always submit a p11d but that it is nil as this is the only expense I typically ever take.

I am sure I always say "no" to every question "is this a BIK" on the questionnaire so I'm wondering aside from the question if I should be claiming £50 as a non-BIK, this issue is down to either a mistake filling in InTouch's form, or a mistake on their part, rather than it being deliberate. InTouch have done my accounts the last ~5 years IIRC and this is the first time this happened. I will ask them to clarify what has happened.

I'm seeing a slight confusion on the debate about this expense BTW. Several people have simply said "you can only use the flat rate for business use of home by a Ltd, end of". Someone else mentioned "can you prove it was a real cost not made up". Those are different and seemingly contradictory.
HMRC used to have examples of "Bob uses a 3x4m room 8 hours a day for work, on his 100m^2 house. So he claims 4% of bills ((8/24) * (12/100)) as running expenses".

[Spoiler]

From the recent other thread on this, I understood that implied using a basic rental agreement between the company and the director, based on percentage of household expenses.

[malvolio]

From the recent other thread on this, I understood that implied using a basic rental agreement between the company and the director, based on percentage of household expenses.

Yebbut….

Potentially that makes part of your house genuine business premises with the risk of part of the value of the house being liable for CGT when you sell and other complications over insurances and mortgages.

[pr1]

Yebbut….

Potentially that makes part of your house genuine business premises with the risk of part of the value of the house being liable for CGT when you sell and other complications over insurances and mortgages.

Do you have any examples where this potential problem became an actual problem?