Charging your compmany rent for home office

[stphnstevey]

But won’t I have to pay CGT when I then sell my house for a profit?
The fly in the ointment that is often trotted out by the ever cautious
accountant is that there will be Capital Gains Tax to pay should the house
be sold, and you have claimed for part of it to be used for the business.
Well, lets look at the reality of this.
Capital Gains Tax only applies to a part of the home used exclusively for
business purposes. If the room doubles as a private room as well, there’s no
CGT to worry about. Even if it is used exclusively, there will in practice
probably be no CGT to worry about. Let’s explain this…
 Property prices can go down as well as up– so you could claim a capital
loss for tax purposes.
 The amount of the gain relates only to the proportion of the house you
have claimed as business use. If it’s owned jointly by husband and
wife/civil partners, you are both entitled to an annual CGT exemption of
£9,600 each, so unless that gain on that bit is more than £19,200 and you
have no other capital gains in the year, there’ll be no tax to pay.
How To Pay Less Tax -The Complete Guide - 28 -
 Are you still worried? Well even then, if you move to another house
with business use, you are allowed to avoid paying the CGT by what is
called rolling over the gain into the new house. If not, there are still
other assets you could invest in to avoid the CGT. It’s probably time to
stop worrying and claim for use of home.
Aren’t Business Rates payable when I work from home?
Business rates may be due in respect of any part of your home if there is an
exclusive business use of part of the property. Business rates will be due on
that part and Council Tax on the remainder.
However, if there is only part business use of a room, the property will
remain banded as wholly domestic unless the business use predominates or
structural alterations have been carried out to facilitate business use.
There is also a case which indicates that Business Rates wouldn’t be due
even if part of the property is used predominantly for business use if no
customers or clients visit the home in connection with business.
In summary, business rates are unlikely unless the premises are advertised
or planning permission is sought for business use.
So, to be safe, if you use a room partly for business purposes and partly for
private, you’ll be OK.

[pmeswani]

But won’t I have to pay CGT when I then sell my house for a profit?
The fly in the ointment that is often trotted out by the ever cautious
accountant is that there will be Capital Gains Tax to pay should the house
be sold, and you have claimed for part of it to be used for the business.
Well, lets look at the reality of this.
Capital Gains Tax only applies to a part of the home used exclusively for
business purposes. If the room doubles as a private room as well, there’s no
CGT to worry about. Even if it is used exclusively, there will in practice
probably be no CGT to worry about. Let’s explain this…
 Property prices can go down as well as up– so you could claim a capital
loss for tax purposes.
 The amount of the gain relates only to the proportion of the house you
have claimed as business use. If it’s owned jointly by husband and
wife/civil partners, you are both entitled to an annual CGT exemption of
£9,600 each, so unless that gain on that bit is more than £19,200 and you
have no other capital gains in the year, there’ll be no tax to pay.
How To Pay Less Tax -The Complete Guide - 28 -
 Are you still worried? Well even then, if you move to another house
with business use, you are allowed to avoid paying the CGT by what is
called rolling over the gain into the new house. If not, there are still
other assets you could invest in to avoid the CGT. It’s probably time to
stop worrying and claim for use of home.
Aren’t Business Rates payable when I work from home?
Business rates may be due in respect of any part of your home if there is an
exclusive business use of part of the property. Business rates will be due on
that part and Council Tax on the remainder.
However, if there is only part business use of a room, the property will
remain banded as wholly domestic unless the business use predominates or
structural alterations have been carried out to facilitate business use.
There is also a case which indicates that Business Rates wouldn’t be due
even if part of the property is used predominantly for business use if no
customers or clients visit the home in connection with business.
In summary, business rates are unlikely unless the premises are advertised
or planning permission is sought for business use.
So, to be safe, if you use a room partly for business purposes and partly for
private, you’ll be OK.

None of us are qualified to answer your question... Speak to your accountant.

[stphnstevey]

Fair enough then - just wondered if anyone else was doing this already really - obviously not, no probs

[tim123]

Can you not charge a reasonable commercial rent for your area? £100 or £10 month is very cheap rent - where do you live?

You can, but as this would be seen as personal income that you would have to declare on your SA, how would this help?

tim

[BrowneIssue]

Because I rent and now own my home, I've been cheerfully charging gas & electric bills divided by the number of rooms. I used to charge the same proportion of the rent too but a previous accountant told me not to.

My current accountant tells me not to charge the utility bills fraction either. After checking the government web site and arguing the toss with him, he said he will let me charge £2 per week. (Who f*** works for who here?).

Dammit, since 1995 the largest room in every house I've rented has been the dedicated office. £104 per year does not cover the additional cost of renting a larger house.

I'm tempted to actually rent office space and go back to renting smaller houses, but for the hassle of not being in the same place as the kitchen and the loo at home.

[stphnstevey]

You can, but as this would be seen as personal income that you would have to declare on your SA, how would this help?

tim

Importantly it would be income from property, which if you have ever rented out a BTL you will know you can claim the costs of renting (ie (in this case a proportion) of mortgage, bills, repairs etc) against the income you receive

If the costs of renting equal the income (which you insure they do), there is no liability to IT or NI. Thus removing an amount tax free from the company.

[Robot]

stphnstevey

Do you do substantial work at home? I'm not talking about bookkeeping as you can do that a lunchtime anywhere but fee earning work, working 5 days a week from home.

[MPwannadecentincome]

But won’t I have to pay CGT when I then sell my house for a profit?
The fly in the ointment that is often trotted out by the ever cautious
accountant is that there will be Capital Gains Tax to pay should the house
be sold, and you have claimed for part of it to be used for the business.
Well, lets look at the reality of this.
Capital Gains Tax only applies to a part of the home used exclusively for
business purposes. If the room doubles as a private room as well, there’s no
CGT to worry about. Even if it is used exclusively, there will in practice
probably be no CGT to worry about. Let’s explain this…
 Property prices can go down as well as up– so you could claim a capital
loss for tax purposes.
 The amount of the gain relates only to the proportion of the house you
have claimed as business use. If it’s owned jointly by husband and
wife/civil partners, you are both entitled to an annual CGT exemption of
£9,600 each, so unless that gain on that bit is more than £19,200 and you
have no other capital gains in the year, there’ll be no tax to pay.
How To Pay Less Tax -The Complete Guide - 28 -
 Are you still worried? Well even then, if you move to another house
with business use, you are allowed to avoid paying the CGT by what is
called rolling over the gain into the new house. If not, there are still
other assets you could invest in to avoid the CGT. It’s probably time to
stop worrying and claim for use of home.
Aren’t Business Rates payable when I work from home?
Business rates may be due in respect of any part of your home if there is an
exclusive business use of part of the property. Business rates will be due on
that part and Council Tax on the remainder.
However, if there is only part business use of a room, the property will
remain banded as wholly domestic unless the business use predominates or
structural alterations have been carried out to facilitate business use.
There is also a case which indicates that Business Rates wouldn’t be due
even if part of the property is used predominantly for business use if no
customers or clients visit the home in connection with business.
In summary, business rates are unlikely unless the premises are advertised
or planning permission is sought for business use.
So, to be safe, if you use a room partly for business purposes and partly for
private, you’ll be OK.

Good point on the CGT but if the room is not exclusively for business use you cannot charge a market commercial rent for the office space to the company - methinks.

[stphnstevey]

Yes - I work on average three days a week from home, writing up reports and dealing with issues, which is the main part of my work. The other two days are at NHS sites monitoring their work.

[d000hg]

There is a formula I found (cannot remember where) which officially suggests how much you can charge. It's essentially:

X = square footage of your house
Y = square footage you use for business
Z = % of time you use it for business
B = monthly bills and so on for the house

'rent' = (Y/X)*(Z/100)*B -- Z is a percentage 0-100

I work exclusively at home so I charge £50/month. If you just do a bit here and there I think it's a bit dodgy. And listing specific things like coffee as expenses I wouldn't do.