Can i claim part of my rent as an expense?

[chrisl]

I am a contractor and have my own limited company.

I mainly work from home and use one room of my rented property 100% for business use when i am working at home and have this set aside for business related matters.

My question is, am i allowed to claim a propertion of my rent for this room. I understand the use of home as office flat rate expenses that can be claimed but i have been told that i can also claim some actual rents.

Am i getting confused with employed and self employed people, are the rules different?

[ASB]

Yes.

But it can be a bit of a minefield.

See here. http://www.hmrc.gov.uk/manuals/bimmanual/bim47820.htm
And here. http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm

[chrisl]

But reading these it seems it relates to self employed persons not someone like me who is employed by my own limited company.

[FarmerPalmer]

£2 per week is allowable under IR rules.

[VectraMan]

I believe this changed in the last budget (according to an email from my accountant), and you can no longer claim rent.

[PAH]

I heard somewhere recently that you could be charged business rates for the portion of the property you're working out of. Can't remember the source so no idea how true or likely it is.

[ASB]

But reading these it seems it relates to self employed persons not someone like me who is employed by my own limited company.

Sorry, misunderstood.

In that case start from here: http://www.hmrc.gov.uk/manuals/eimanual/EIM32760.htm

[VectraMan]

I heard somewhere recently that you could be charged business rates for the portion of the property you're working out of. Can't remember the source so no idea how true or likely it is.

I think that's a bit of a myth to be honest. Lots of people work at home to some degree.

One of my neighbours has built an extension to his house which he obviously uses as a business. Often there are 4 or 5 sign written vans parked outside, and you can see people inside looking at computer screens. I imagine he does have to pay some sort of business rates, but that's a long way from one person running their own business from their spare room.

[Alan @ BroomeAffinity]

In theory, you as an individual can charge the company a "rent" for the use of the room but that could bring about a personal tax charge unless there are valid expenses to be set off against it.

There are two often raised concerns: business rates and capital gains tax on the business portion of the house. In my experience (15 years advising small businesses and freelancers) no-one has ever had to pay either of these.

[Gary_Jones]

I looked into this and rang the tax office helpline (the best call centre I've ever used!) - They told me the following:

If you are working away from your normal home then YES you can claim rent, but only under these circumstances:

1. Rent agreement is only covering the days you actually work (e.g if you have a monday to friday contract then your rent contract must be only for Monday to Friday of each week)

2. You then cannot claim commuting costs UNLESS - you travel to work from your home address on Monday and Friday.

3. The rent agreement clearly states that the owner is happy for you to run a business from that address, and also any credit agreements the LANDLORD has must allow a business from the address (e.g Mortgage).

Now, given those 3 above, I thought it was nigh on impossible to meet as I don't know how you go about renting Monday to Friday only , although the landlord may be happy to doctor the contract if you pay what you would have done for a full week anyway.

In short, I decided not to touch it with a barge pole, and to use a hotel.

*disclaimer* This is information I got from HMRC over 6 months ago, and was a single call.