allowable tax expense

Brumi Registered Posts: 40 💫 🐯 💫
Can anyone please confirm what the rate is for using a room for business use at home, its not wholly etc but I am have a oap moment can I cant remember the value. in fact a list of what they can offset for tax would help i.e. car insuance, milage etc. its my first client and i want to make sure I have remember correctly. Thanks


  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Use of home as office is dependent on the client - generally £2-£3 a week is accepted but if your client thinks this is unreasonable then you can do a more indepth analysis. If I remember correctly HMRC now accept a 50 hour working week so I use a spreadsheet which apportions the household costs by no. of rooms then by no. of hours worked.

    I'm sorry if this sounds rude and I understand it's your first client but if you're not sure of what expenses are allowable for tax relief are you sure you're able to do this work? As long as the expenses are wholly and exclusively for the use of the business then they are allowable for tax.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    Gem, it's now £3 a week :)

    Alternatively, you can use an apportionment of actual expenses. E.g. if it's a 5 room house (bedrooms and reception rooms, ignore bathrooms, kitchen and hallways) and one room was used 4 days a week:

    TOTAL x 1/5 [rooms] x 4/7 [days] x 48/52 [weeks per year]

    TOTAL is the total of rent, or mortgage interest (not capital repayments), plus utilities.

    You don't want any room to be wholly used for business if they own the house otherwise there are CGT implications.

    Regarding motor expenses, either 40p a mile for the first 10k miles plus 25p thereafter (now 45p/ 25p from 6th April 2011) OR total motor expenses x business use %. In either event, a mileage log ought to be kept.

    As Gem says, any other expenses wholly and exclusively used for business should be ok. Entertaining is not. Nor are things like an osteopath etc (duality of purpose).
  • Brumi
    Brumi Registered Posts: 40 💫 🐯 💫
    I've taken into account £3.00 per week for the room, worked out mileage at 40p kept records so it doest go over the allowance. just very nervous and felt I needed reassurance.
  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Thanks Monsoon :)

    Sorry just another note on the motor expenses - you have to continue with the method they have been using to date until they change the car. So if they have been using mileage basis then you have to continue using mileage basis (bear in mind this includes ALL costs so you can't claim insurance, repairs, CA's etc. as well as mileage)
  • Newbie
    Newbie Registered Posts: 229 🎆 🐘 🎆
    Hi dont forget the budget update its now 45 pence per mile (main rate)
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