Use of home as office

[Deleted User] · January 2011

I wonder if any of the guys in practice can help as I am a bit unsure about correctly calculating the use of home as office. The rules are very vague on this subject and even though I am an accountant, I work in industry and don’t deal with this subject on a daily basis.

I run a part time business as an accountant and consultant outside of my full time employment and run this business from my home.

I have based my calculation on total costs per month (rent, council tax, water, gas, electric, insurance, telephone and internet), divided it by the number of rooms in the house and multiplied it by the percentage of business use.

Total Costs: £814
No of rooms: 1/5
Business use: 90%
Charge p/m: £147

I only use the one room for business and use it for personal use also. I spend most of my time in there studying for my CIMA exams which I am classing as business use on the basis that the qualification allows me to add value to the service I provide my clients in terms for greater knowledge and experience.

My concern is that £147 per month is a large claim and I am uncertain if it is justified since I spend about 4 hours per night in that room.

My other concern is with regards to business rates and capital gains as 90% of that room is used for business.

Any advice would be great.

coojee · January 2011

Don Juan wrote: »

I wonder if any of the guys in practice can help as I am a bit unsure about correctly calculating the use of home as office. The rules are very vague on this subject and even though I am an accountant, I work in industry and don’t deal with this subject on a daily basis.

I run a part time business as an accountant and consultant outside of my full time employment and run this business from my home.

I have based my calculation on total costs per month (rent, council tax, water, gas, electric, insurance, telephone and internet), divided it by the number of rooms in the house and multiplied it by the percentage of business use.

Total Costs: £814
No of rooms: 1/5
Business use: 90%
Charge p/m: £147

I only use the one room for business and use it for personal use also. I spend most of my time in there studying for my CIMA exams which I am classing as business use on the basis that the qualification allows me to add value to the service I provide my clients in terms for greater knowledge and experience.

My concern is that £147 per month is a large claim and I am uncertain if it is justified since I spend about 4 hours per night in that room.

My other concern is with regards to business rates and capital gains as 90% of that room is used for business.

Any advice would be great.

My initial thoughts are that if you're only in there for 4 hours a day then you need to reduce the percentage. If you're in there 4 hours per day and 90% of that time is business then it's 3.6 hours per day business use which is only 15% (3.6/24), making £25 per month. I'm not sure that studying can count either.

I'm not a tax expert though.

There's a little known tax allowance that's easier to claim for home workers, it's a flat rate of £3 per week. You just need to prove that you're required to work from home. I claim this, it's much easier. The tax office don't always know about it so you'll have to print off the relevant page from their own website and send it to them.

AK002 · January 2011

The £3 is (from memory) the amount that HMRC won't question.

If you can prove your costs are more then you're well within your rights to claim more.

JodieR · January 2011

Don Juan wrote: »

I only use the one room for business and use it for personal use also. I spend most of my time in there studying for my CIMA exams which I am classing as business use on the basis that the qualification allows me to add value to the service I provide my clients in terms for greater knowledge and experience.

The costs of any training undertaken to extend your knowledge will not be an allowable expense and nor will any associated costs so you couldn't count the time spent studying CIMA as 'business use' unfortunately.

paulr · February 2011

Normally HMRC will accept room apportionment say 5 or 6 rooms; dont specify a room as there is a potential CGT trap.

Marga · February 2011

coojee wrote: »

My initial thoughts are that if you're only in there for 4 hours a day then you need to reduce the percentage. If you're in there 4 hours per day and 90% of that time is business then it's 3.6 hours per day business use which is only 15% (3.6/24), making £25 per month. I'm not sure that studying can count either.

I'm not a tax expert though.

There's a little known tax allowance that's easier to claim for home workers, it's a flat rate of £3 per week. You just need to prove that you're required to work from home. I claim this, it's much easier. The tax office don't always know about it so you'll have to print off the relevant page from their own website and send it to them.

i agree more or less

i would say £147 are charged for 24hours
you use 4hours at 90% = 3.6 hours therefore £147/24*3.6 = £22.05 of expenses you can claim

studying hours shouldnt be claim but the resources bought like books, exams fees etc you should be able to claim it as an expense to the business because this is an investment that the business is doing on you studying

hope this helps

Use of home as office

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