Expenses Questiom

[ASB]

Hi,
I'm new to this forum and am going back to work after having had a fairly long family sabbatical!
I'm looking at contracting and do not currently have an office at home. We are looking at converting one of the rooms into an office (fitted units) and am wondering how much of this I can offset against tax? Do I need to work a certain amount of time at home to make this a legitimate expense? Any advice would be great!

It is all potentially claimable. If it is a permanent office then you should be OK.

I used a part of former house as a permanent office. I claimed (assets and therefore depreciated) some limited structural work (but not the overall building).

This was limited mainly to light fittings, installation of a safe and cabinetry. I claimed the fire, a sofa, a table and chairs, carpets, artwork, desk, slate top. Basically everything that went into the dedicated office.

HMIT was absolutely fine when I was investigated. Though he did want to see everything, and questioned those things that had over time been disposed of due to them coming to the end of their useful life.

He was absolutely fine with apportioning costs of utilities @ 20%. The office was approx 1,000 sq ft in a 5,000 sq ft property.

The only thing he partially disallowed was the boardroom table and chairs - this had been relegated to the dining room. Even then he accepted that it had been genuinely used for a few years and we came to an agreeable BIK charge onto me personally.

However, I worked from home. I did most of my work in that office and only visited clients when needed.

He did comment that I hadn't charged any of the building work, and and did state his view that it would have been acceptable (it was an old cow shed and dairy). I explained that I felt it could prejudice PPR relief on the house and he did say that it could complicate matters (not that it would).

This was some years ago though.

Essentially if the room is not going to be used for other than business purposes you should be OK. But it is down to any HMIT in any ensuing investigation to argue the point against.

[northernladuk]

There is a search option detailed in the link below. Try that first before asking.

http://forums.contractoruk.com/welco...uk-forums.html

[Mich]

Thanks for all your helpful responses, it was to kit out a room as an office (desk, furniture etc) with the view to working from home 1 day a week, but the aggro doesn't seem worth it - I'll just have to buy a shiny new mac to compensate!

[Martin at NixonWilliams]

Unless you are performing all or most of your work from home stick with the £4 per week/£18 per month limits set by HMRC.

In terms of capital expenditure.. I'm not sure what you are buying exactly, but if it is wholly and exclusively for business purposes you might be able to claim - though kitting out a room in your home is always going to be a difficult one to justify unless the room is solely dedicated to the business (which presents other issues, as mentioned above).

In terms of regular monthly claims for utilities, telephone etc. you should search the employment income manuals on HMRC's site - search EIM32800 & EIM32810, they lead you to a number of other useful links. Do not use the BIM manuals as they are for self-employed businesses and the guidance is different in parts.

The majority of people claim the £4pw/£18pm allowance as the hassle of administering claims above these amounts is generally not worth the tax saving.

I hope this helps.

Martin

[Scruff]

Theoretically, you can claim the whole lot, however....when it comes to selling your home, then the office portion will be added as a Capital Gain.

Wait for the Accountants to arrive & answer you, definitively.

[stek]

Four pounds a week.

[Mich]

Hi,
I'm new to this forum and am going back to work after having had a fairly long family sabbatical!
I'm looking at contracting and do not currently have an office at home. We are looking at converting one of the rooms into an office (fitted units) and am wondering how much of this I can offset against tax? Do I need to work a certain amount of time at home to make this a legitimate expense? Any advice would be great!