Reply to: Can I claim rent as expenses? and not the measly 'home working expenses' of 156?

[Greg@CapitalCity]

Since I am a freelancer and work from home 70% of the time, can I not claim more than £156 home working expenses per year? Surely my rent should be considered a company expense..

Yes, you can claim more than this, and you can claim for rent, but the process becomes more time consuming for this. Firstly, set-up a license agreement between yourself (as the rental property occupier) and your business. The license agreement allows your business to use some space in your home, for business purposes - very similar to the license agreements when you go into serviced office space. To keep things simple I would suggest you price the agreement to match your actual costs - the calculation Clare provided previously does this. Claim the expense through your business once a month or once a quarter. Then when you come to complete your personal tax return, as you are effectively a landlord, the income your receive needs to be declared on your personal tax returns, offset by the expenses you have incurred. The net effect will be no additional personal tax.

So you see, it takes a bit more work, but it can be done.

[northernladuk]

ditto....yeah I think I'll pass

What do you mean pass? You wanna stick close to this young grasshopper. Makes even you look good.

[Jeystone]

Well thats my first coffee on screen moment today

ditto....yeah I think I'll pass

[northernladuk]

Can we call HMRC to discuss ? How to do that ? Do they provide guidance as well ?

Well thats my first coffee on screen moment today

[Danielsjdaccountancy]

Can we call HMRC to discuss ? How to do that ? Do they provide guidance as well ?

HMRC Contact us

Contact your local tax office using the above link and ask for general advice.

[NoviceContractor]

I think your biggest problem is that you don't own the property in London therefore it can't be deemed your principle place of residence (PPR).
Continuing to rent the property in London is purely for your personal benefit.
HMRC would likely switch your PPR to Edinburgh meaning you can't claim the rented accommodation through your Limited company.
If you owned the property in London and your family lived there, then it wouldn't be a problem.

Again feel free to call HMRC to discuss this.

Can we call HMRC to discuss ? How to do that ? Do they provide guidance as well ?

[JamJarST]

Because you don't need to eat if not on contract? You can claim meals if your in a hotel as you can't cook easily.

If your renting a house then claiming for grocery as some kind of business expense is laughable.

Especially when you consider he has his family living with him too

[Sockpuppet]

Do you also claim your daily grossory bills from your limited company?

Because you don't need to eat if not on contract? You can claim meals if your in a hotel as you can't cook easily.

If your renting a house then claiming for grocery as some kind of business expense is laughable.

[Danielsjdaccountancy]

I am in the same boat as you.

Do you claim all your bills(rent, council tax, electricity, gas, landline, broadband) from your limited company or a proportion of it, how do you calculate the proportion?
Have you taken your rent agreement and other bills(council, gas, electricity, landline, broadband, etc...) on your company name or is it on your name?
Do you also claim your daily grossory bills from your limited company?

Thanks

I think your biggest problem is that you don't own the property in London therefore it can't be deemed your principle place of residence (PPR).
Continuing to rent the property in London is purely for your personal benefit.
HMRC would likely switch your PPR to Edinburgh meaning you can't claim the rented accommodation through your Limited company.
If you owned the property in London and your family lived there, then it wouldn't be a problem.

Again feel free to call HMRC to discuss this.

[NoviceContractor]

I spoke to my accountant about this, as I have started moving my family with me on contracts. We still have a house in Surrey, which is empty, but we rent a house wherever the contract is. Luckily, last 3 contracts have been commutable from a house we rent. Accountant has said, we can claim all expenses, as long as we're not renting our house out, as the amounts I was spending on flights, food, drinks and hotels each week, was more than renting a house (Flights £130 a week, hotels £300 a week, allowances £125 a week - house rent plus bills £450 a week).

I guess it depends on the situation.

I am in the same boat as you.

Do you claim all your bills(rent, council tax, electricity, gas, landline, broadband) from your limited company or a proportion of it, how do you calculate the proportion?
Have you taken your rent agreement and other bills(council, gas, electricity, landline, broadband, etc...) on your company name or is it on your name?
Do you also claim your daily grossory bills from your limited company?

Thanks

[Danielsjdaccountancy]

[QUOTE=Zoiderman;1406534]I spoke to my accountant about this, as I have started moving my family with me on contracts. We still have a house in Surrey, which is empty, but we rent a house wherever the contract is. Luckily, last 3 contracts have been commutable from a house we rent. Accountant has said, we can claim all expenses, as long as we're not renting our house out, as the amounts I was spending on flights, food, drinks and hotels each week, was more than renting a house (Flights £130 a week, hotels £300 a week, allowances £125 a week - house rent plus bills £450 a week).

You do need to consider the personal benefit here. Should your company be able to get tax relief on your family living costs? - I think I know HMRC's response to this.
If your family were living at your Surrey residence and you were visiting them on weekends, contributing to living expenses etc I could see this it being an allowable expense but moving your whole family from accommodation to accommodation, not sure they would be a fan. I would suspect they would switch where they deem your principle place of residence to be.

Feel free to call HMRC to discuss, you can call up anonymously for advice.

[malvolio]

I guess it depends on the situation.

No,. I guess it depends on whether or not your family's living accomodation is wholly business-related. You might struggle with that one. The expenses angle is not an issue, you can pay whatever you want, but your personal tax may be affected if HMRC consider this to be a BIK.

[Zoiderman]

You need to be very careful here. Self-employed can claim the expenses list above but directors can't! Specific deductions: use of home: contents

quote 'It does not apply to the use of home by an employee or director - for this see EIM32760' onwards

Other expenses: home: working from home

Its a very common mistake to put rent, council tax etc through but this stopped in 05/06 now you can only claim

Other expenses: home: household expenses: expenses that are deductible

HTH

I spoke to my accountant about this, as I have started moving my family with me on contracts. We still have a house in Surrey, which is empty, but we rent a house wherever the contract is. Luckily, last 3 contracts have been commutable from a house we rent. Accountant has said, we can claim all expenses, as long as we're not renting our house out, as the amounts I was spending on flights, food, drinks and hotels each week, was more than renting a house (Flights £130 a week, hotels £300 a week, allowances £125 a week - house rent plus bills £450 a week).

I guess it depends on the situation.

[Danielsjdaccountancy]

You can take into account:

Rent
Council Tax
Mortgage Interest
Home insurance
Internet line rental
Telephone line rental and call costs
Water rates
Light & heating costs

Specific deductions: use of home: specific expenses

Now calculate the total space within your house, ignoring hallways, the bathroom and the kitchen. Calculate the space allocated to the business. You can then apportion the total costs and arrive at the value attributable to the office space.

This amount should finally be adjusted for the actual hours in use. For example if you use the room for 8 hours every day then the value should be reduced to 33.3% of the total (24 divided by 8 = 3).



There's an example here from HMRC here:

Example 2
Bill runs a small business. He uses one small room at home as an office, exclusively for the purposes of his trade (CG64660). The room represents 5% of the floor area of the house.

His Council Tax, insurance and mortgage interest bills total £4500. He claims 5%, £225.

His electricity bill for heating & lighting is £300. He claims £15, which is 5% of the total.

His total claim is £240 (plus the business proportion of his phone bill).

Although Bill has apportioned his electricity bill by floor area rather than usage, the amount claimed is small and there is nothing to suggest that his business use is significantly greater or lesser than his private use. It can be accepted as a reasonable estimate.

Specific deductions: use of home: examples

You need to be very careful here. Self-employed can claim the expenses list above but directors can't! Specific deductions: use of home: contents

quote 'It does not apply to the use of home by an employee or director - for this see EIM32760' onwards

Other expenses: home: working from home

Its a very common mistake to put rent, council tax etc through but this stopped in 05/06 now you can only claim

Other expenses: home: household expenses: expenses that are deductible

HTH

[Clare@InTouch]

You can take into account:

Rent
Council Tax
Mortgage Interest
Home insurance
Internet line rental
Telephone line rental and call costs
Water rates
Light & heating costs

Specific deductions: use of home: specific expenses

Now calculate the total space within your house, ignoring hallways, the bathroom and the kitchen. Calculate the space allocated to the business. You can then apportion the total costs and arrive at the value attributable to the office space.

This amount should finally be adjusted for the actual hours in use. For example if you use the room for 8 hours every day then the value should be reduced to 33.3% of the total (24 divided by 8 = 3).



There's an example here from HMRC here:

Example 2
Bill runs a small business. He uses one small room at home as an office, exclusively for the purposes of his trade (CG64660). The room represents 5% of the floor area of the house.

His Council Tax, insurance and mortgage interest bills total £4500. He claims 5%, £225.

His electricity bill for heating & lighting is £300. He claims £15, which is 5% of the total.

His total claim is £240 (plus the business proportion of his phone bill).

Although Bill has apportioned his electricity bill by floor area rather than usage, the amount claimed is small and there is nothing to suggest that his business use is significantly greater or lesser than his private use. It can be accepted as a reasonable estimate.

Specific deductions: use of home: examples