Broadband costs

Ellabobbin

Good Evening,

I am hoping somebody can help with a discussion I have been having with a colleague at work...

A client uses the internet for business purposes - his need is genuine and he will use for at least 2 hours per day as a business need, but he works from home and there is no additional cost to the broadband he has for his personal reasons.

I am of the opinion that this is similar to the fixed line cost of a telephone used for both business and personal purposes, in that the cost of having the line is not allowable with only the business calls being allowed... And therefore since there is no additional cost to him for using the broadband for the business as well as for personal use I do not propose to allow in the accounts - my colleague thinks this is harsh...

I'd be grateful to know how others treat/would treat this!

Thank you in advance

jamesm96

Hi Ella,

I'd say you should push a little further in what you recommend that your clients claim. For example, HMRC's own guidance says

The cost of business calls is allowable. Also allow a proportion of the line rental (based on the ratio of business use to total use). This proportion should reflect all aspects of use, including incoming calls, though in most cases reference to itemised outgoing calls will provide a reasonable and acceptable measure.

See http://www.hmrc.gov.uk/manuals/bimmanual/bim47820.htm

That same guidance then says:

Expenditure on an internet connection (including broadband and wireless broadband) is allowable to the extent that the connection is used for business purposes. Where there is 'mixed' (business/non-business) use, follow the approach used for telephone rentals.

If I were you I'd check out that whole section on home costs; it can save a substantial amount of tax, particularly if the client works exclusively from home. There are some other examples here too.

Have fun!

Mike.

Ellabobbin

Many thanks Mike,

I will definitely check out your links....