Working from home - Claiming mortgage interest
SussexAccountancy
Registered Posts: 28 Epic contributor 🐘
Hi
I wonder if anyone can help as I am getting conflicting advice from different sources - my current understanding is that if a sole trader claims for expenses working from home (utility bills, council tax etc) then the room they work in has to be of sole business use. You cannot claim if your room is part business/part (say) childrens playroom.
You can also claim mortgage expenses - interest only, not capital repayments - but it has also been mentioned that you need to be careful with this as when you come to sell the house, you may incur CGT on part of the house which you have claimed business expenses on, as this is of "sole use" and you are claiming mortgage expenses. All fine so far.
However, I've also read one source which says the "golden rule" is as follows - if you claim mortgage costs, then make sure your "office" is not of sole use - if it has another (minor) use then you don't have to pay CGT.
But surely, going back to the first premise, if your room is not for sole business use, you can't claim any expenses at all - unless the "sole use" rule is incorrect.
Whew! I hope that makes sense to someone, as I seem to be going round in circles, and would like to get this sorted out to advise a client. If anybody knows of some good further reading that would be great,
Thanks in advance for any help offered,
I wonder if anyone can help as I am getting conflicting advice from different sources - my current understanding is that if a sole trader claims for expenses working from home (utility bills, council tax etc) then the room they work in has to be of sole business use. You cannot claim if your room is part business/part (say) childrens playroom.
You can also claim mortgage expenses - interest only, not capital repayments - but it has also been mentioned that you need to be careful with this as when you come to sell the house, you may incur CGT on part of the house which you have claimed business expenses on, as this is of "sole use" and you are claiming mortgage expenses. All fine so far.
However, I've also read one source which says the "golden rule" is as follows - if you claim mortgage costs, then make sure your "office" is not of sole use - if it has another (minor) use then you don't have to pay CGT.
But surely, going back to the first premise, if your room is not for sole business use, you can't claim any expenses at all - unless the "sole use" rule is incorrect.
Whew! I hope that makes sense to someone, as I seem to be going round in circles, and would like to get this sorted out to advise a client. If anybody knows of some good further reading that would be great,
Thanks in advance for any help offered,
0
Comments
-
SussexAccountancy wrote: »Hi
I wonder if anyone can help as I am getting conflicting advice from different sources - my current understanding is that if a sole trader claims for expenses working from home (utility bills, council tax etc) then the room they work in has to be of sole business use. You cannot claim if your room is part business/part (say) childrens playroom.
You can also claim mortgage expenses - interest only, not capital repayments - but it has also been mentioned that you need to be careful with this as when you come to sell the house, you may incur CGT on part of the house which you have claimed business expenses on, as this is of "sole use" and you are claiming mortgage expenses. All fine so far.
However, I've also read one source which says the "golden rule" is as follows - if you claim mortgage costs, then make sure your "office" is not of sole use - if it has another (minor) use then you don't have to pay CGT.
But surely, going back to the first premise, if your room is not for sole business use, you can't claim any expenses at all - unless the "sole use" rule is incorrect.
Whew! I hope that makes sense to someone, as I seem to be going round in circles, and would like to get this sorted out to advise a client. If anybody knows of some good further reading that would be great,
Thanks in advance for any help offered,
http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm
See example 4.0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 318 NEW! Qualifications 2022
- 161 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership