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Is use of home office a BIK?

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  • d000hg
    replied
    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".

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  • TheCyclingProgrammer
    replied
    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.

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  • Lance
    replied
    Originally posted by d000hg View Post
    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.

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  • TheCyclingProgrammer
    replied
    Originally posted by d000hg View Post
    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.
    Last edited by TheCyclingProgrammer; 6 August 2018, 01:54.

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  • malvolio
    replied
    Originally posted by mudskipper View Post
    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...

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  • d000hg
    replied
    Originally posted by northernladuk View Post
    Your accountant is telling you to speak to your accountant
    Didn't think they'd be around on a Sunday!

    Leave a comment:


  • d000hg
    replied
    Originally posted by malvolio View Post
    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?

    Leave a comment:


  • northernladuk
    replied
    Originally posted by Neil@Intouch View Post
    2. Drop an email to your Accountant at InTouch and we will sort it out with HMRC direct.
    Your accountant is telling you to speak to your accountant

    Leave a comment:


  • Neil@Intouch
    replied
    Originally posted by d000hg View Post
    I got my 18/19 tax code and it has changed from 1616L to 1125L X (not sure why the big change). I was curious that they have taken my personal allowance of £11850 and reduced it but £600 for benefits in kind. Checking my last P11d it does list £600 under "expenses-other".

    The lack of expenses I have and the number being exactly the same as the £50 MyCo pays for use of full-time home office makes me assume that's the culprit but to my recollection this isn't a BIK - otherwise there would be no point doing it?
    I don't recall seeing this before or asking about it before so can someone tell me if my mind is likely playing tricks on me, if the rules have changed, or if this is likely a mistake?

    For those who may query £50/month, I have been doing this for about the last ten years so without getting into a debate on the matter, it hasn't changed which seems pertinent.

    I'm fairly sure my P11D questionnaire always ends up listing zero - this was via the InTouch system - but I hadn't spotted the figure on the official filed paperwork from a couple of weeks away which I should've checked more carefully.
    This is incorrect. The expenses pulled into section N of the P11d are allowable business expenses claimed, so no BIK and HMRC have incorrectly pulled this into the tax code amendment. Two easy ways to correct this:

    1. Login to your online account with HMRC and removed the benefit in kind expenses.
    2. Drop an email to your Accountant at InTouch and we will sort it out with HMRC direct.

    Leave a comment:


  • mudskipper
    replied
    Originally posted by malvolio View Post
    Fair enough, other than we don't know the OP's status...

    Personally I've never bothered: if £216 a year is significant I'm in the wrong game
    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!

    Leave a comment:

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