Home Office / Dividends

[Andy2]

Advised by whom?

I think that is the point of the thread. Since last year this is no longer an allowable claim for a limited company director.

Or is it? Confused.

advised by SJD

[Pickle2]

advised by SJD

Hmm, when. Recently, ie since the suposed rule change, or was this a few years back?

[Andy2]

Hmm, when. Recently, ie since the suposed rule change, or was this a few years back?

hmm it was 2 years back. They haven't updated me if the rules are different now. Any linky for the rule change ?

[Andy2]

ok found the link from post #15
why have SJD not informed me about rule change
got to confirm with them

[Pickle2]

ok found the link from post #15
why have SJD not informed me about rule change
got to confirm with them

Im not sure, the whole area seems wooly and full of contradicting advice.

Please post back if you manage to get anything back from SJD.

Or simon, if you are reading this, please cast us a pearl of you wisdom.

[hyperD]

This is a problem I have with my accountant - she says £2/week unless I can prove otherwise.

I run a totally dedicated room in our house (equipment, a/c to cool servers and room, CAT 6 cabling, cooled server cabinets, office furniture, monitors and seating capacity for clients) and it's not the dining room etc

All work is done here (I'm direct with several clients, purchase orders, no agencies, fixed price) and I'm not "contracting".

It looks like an office, it is an office and it's in the house. The accountant is always worried about the capital gains tax issues if we sell the house.

As with alot of this regulation, not one particular person has the faintest idea - it's "all interpretation". Well, I don't want interpretation, I want clear facts.

Using some of these guidelines I reckon it's about £30-40/month.

Anyone got any idea with a similar setup?

[philip@wellwoodhoyle]

This is a problem I have with my accountant - she says £2/week unless I can prove otherwise.

I run a totally dedicated room in our house (equipment, a/c to cool servers and room, CAT 6 cabling, cooled server cabinets, office furniture, monitors and seating capacity for clients) and it's not the dining room etc

All work is done here (I'm direct with several clients, purchase orders, no agencies, fixed price) and I'm not "contracting".

It looks like an office, it is an office and it's in the house. The accountant is always worried about the capital gains tax issues if we sell the house.

As with alot of this regulation, not one particular person has the faintest idea - it's "all interpretation". Well, I don't want interpretation, I want clear facts.

Using some of these guidelines I reckon it's about £30-40/month.

Anyone got any idea with a similar setup?

Yes, you need to enter into a proper agreement/licence for your company to use your premises and pay the market rate. On your personal tax return you will have rental income and then you can offset the proportion of all your household costs, inc mortgage interest or rent, utilities, insurance, even repairs & renewals if applicable to any part of the building used by your business. What you CAN'T do is claim rent, interest or any fixed costs directly as use of home as office - see my links above which clarify that for a director/employee, the only "expenses" claim is the EXTRA costs incurred by using your home (i.e. no proportion of fixed costs at all). So if you rent/licence part of your house, you can claim all costs, but if you are just claiming an expense for UOHAO, it is only the extra costs you can claim, or £2 per week. The answer of course is to enter into a proper licence/rent agreement. CGT will be an issue, but if you're just using say 1 or 2 rooms of your house, say 1/5th for arguments sake, then there is only CGT on 1/5th of the gain, less upto 75% business asset taper relief, less annual exemption, so you'd need to make a hell of a profit before you'd be liable for CGT.

[backlight]

Yes, you need to enter into a proper agreement/licence for your company to use your premises and pay the market rate. On your personal tax return you will have rental income and then you can offset the proportion of all your household costs, inc mortgage interest or rent, utilities, insurance, even repairs & renewals if applicable to any part of the building used by your business. What you CAN'T do is claim rent, interest or any fixed costs directly as use of home as office - see my links above which clarify that for a director/employee, the only "expenses" claim is the EXTRA costs incurred by using your home (i.e. no proportion of fixed costs at all). So if you rent/licence part of your house, you can claim all costs, but if you are just claiming an expense for UOHAO, it is only the extra costs you can claim, or £2 per week. The answer of course is to enter into a proper licence/rent agreement. CGT will be an issue, but if you're just using say 1 or 2 rooms of your house, say 1/5th for arguments sake, then there is only CGT on 1/5th of the gain, less upto 75% business asset taper relief, less annual exemption, so you'd need to make a hell of a profit before you'd be liable for CGT.

Thank you for the concise response. I will enter into a rental agreement with my limited company for 1/3 of my flat - the portion I utilise for business purposes. I will then claim this rent as a tax deduction against the limited company and claim the income on my personal tax return. As the net income on the personal side will be less than net expense there will be no additional tax payable.

Seems fairly straightforward - especially for renters as there are no CGT implications.

[sathyaram_s]

Why not prove? You have stuff in your office that you are unlikely to have if you are a perm or a typical contractor ... And you clearly work from home , ie, you do not claim travel expenses on a daily basis ...

BTW, if you are using a contractor specialist accountant, please change the accountant to one who knows your type of circumstances better ...

unless I can prove otherwise.

[hyperD]

Many thanks for the replies and comments, I will start looking into making the tax changes now.

I use planIT, which are an extremely good accountancy firm and I thoroughly recommend them (and have used them for 8 years and always tell any contractor to use them), but as my operations have moved me out of the standard contracting field, some of these areas of tax and operations are a little more specialised and it's difficult to get a good standing of these issues.