Couple of tax return questions

Log in to reply
planitpurple

planitpurple

Free Member
Jun 16, 2007
22
0
53
Borehamwood, Hertfordshire
  • #1
    I work from home and have a couple of questions for my tax returns. I
    know I shouldn't have left them so last minute!

    I have been advised that on my tax returns there are 2 choices. One is
    to work out all my expenses such as electric etc. However, I have been
    advised that if we ever sell our house we will be liable for further
    taxes if I do it this way and that there is a way of doing it with a
    set allowance each month that is better but I don't have a clue what
    this allowance is in value and what it includes. Please could someone
    advise me.

    2. We bought a new family car April 2006. I occasionally use it to go
    to meetings but 99% of the time my husband uses it for work. Am I
    allowed to call is a business car and therefore claim some of the cost
    of purchasing the new car? How does this work?

    Many thanks
    Yvette
     
    Kent Accountant

    Kent Accountant

    Free Member
    May 30, 2006
    1,957
    160
  • #2
    Revenue internal instructions on use of home are here

    Unlikely to be CGT involved unless you claim that part of the property is used exclusively for business purposes - which virtually never does

    For the car, it's probably best to claim the Authorised Mileage Rate, currently 40p per mile, if you only have minimal use
     
    • Like
    Reactions: flck72
    Upvote 0
    Kent Accountant

    Kent Accountant

    Free Member
    May 30, 2006
    1,957
    160
  • #4
    Capital Allowances claimable on a car are limited to a maximum of £3,000 (or a maximum of 25% of costs whichever is the lower) which are then restricted for non business use. So if your business use is 1% of total mileage, then the allowance would only be a maximum of £30 .....
     
    Upvote 0
    B

    Basement_Studios_Ltd

  • #5
    Hope the tax return preparing is going well.

    Completely agree with bob, unless you use your car for at least 50% of bus use, its probably better to do a mileage rate, at 40p (first 10k miles).

    Just a quick reminder to claim;

    telephone

    postage / printing / stationery

    use of home (as mentioned)

    do you have office equipment that is covered under household ins? (make sure you include a portion of this in use of home cost).

    broadband (internet) ??

    any software / anti-virus subs etc?

    ^ these are just a few small items that some of my clients were forgetting.

    Hope the preparing goes well !

    Rob.
     
    • Like
    Reactions: flck72
    Upvote 0
    planitpurple

    planitpurple

    Free Member
    Jun 16, 2007
    22
    0
    53
    Borehamwood, Hertfordshire
  • #6
    [FONT=Verdana, Arial,Helvetica]Thanks to you both for your advice, it has been really helpful. I had got all excited thinking I could claim back 50% of the value of the car which I had been advised but realise that now isn't the case so I am better off taking the mileage route which is also much quicker and easier to work out.

    With regards to my other issue, is it better to work out all working at home expenses or am I right in thinking there is an allowance? Which way do you advise using? If I use the allowance what does it/does it not include?

    Thanks again, I really appreciate your help.
    Yvette
    [/FONT]
     
    Upvote 0
    B

    Basement_Studios_Ltd

  • #8
    When we are doing use of home what we tend to do is work out cost of having the house (if you have a home-office), count number of rooms in house, then divide cost by rooms (I've had approved by IRev).

    So usually these are, rent (or mortgage int only), council tax, elec, gas, insurance (if office equipment covered under ins)...

    Hope this helps,


    Rob.

    p.s. if you don't have a specific room / or works out better then I would do as Bob mentions, £5/10 per week
     
    Upvote 0

  • #10
    This is an interesting post as this issue has just cropped up for us and our franchisees who are all home based.

    I was always under the assumption (and had been advised by the Inland Revenue) that you can claim a proportion of your utility bills/water rates/council tax etc by counting up the number of habitable rooms in your house and then claiming a proportion of that for the room that you use for your business.

    I always thought that providing you didn't use a room exclusively for your business, you would escape the CGT but that has apparently now changed and the IR will charge you CGT regardless of whether you use the room exclusively for your business or not.

    Is anyone able to advise whether this is the case. The helpline at IR have just been spectacularly unhelpful!

    Also, if CGT is payable - how is it calculated?


    Many thanks

    Claire
     
    Upvote 0
    Kent Accountant

    Kent Accountant

    Free Member
    May 30, 2006
    1,957
    160
  • #11
    Did you follow the link on this post as it explains what can be claimed and how it is worked out?

    CGT would only apply if there were exclusive use of part of the house and this would rarely be the case

    It is no surprise that the helpline at IR have just been spectacularly unhelpful! That's why accountants are still in business :)

    Claire B said:
    This is an interesting post as this issue has just cropped up for us and our franchisees who are all home based.

    I was always under the assumption (and had been advised by the Inland Revenue) that you can claim a proportion of your utility bills/water rates/council tax etc by counting up the number of habitable rooms in your house and then claiming a proportion of that for the room that you use for your business.

    I always thought that providing you didn't use a room exclusively for your business, you would escape the CGT but that has apparently now changed and the IR will charge you CGT regardless of whether you use the room exclusively for your business or not.

    Is anyone able to advise whether this is the case. The helpline at IR have just been spectacularly unhelpful!

    Also, if CGT is payable - how is it calculated?


    Many thanks

    Claire
    Click to expand...
     
    Upvote 0

  • #12
    Thanks for the link Bob, I have had a look (just trying to get my head around it all :))

    When I spoke to the IR earlier this morning, they said that CGT would still apply even if we were not using a part of the house exclusively on the business. In his own words "you can't have the best of everything". So now I am really confused!

    Regards

    Claire
     
    Upvote 0
    J

    Jaydee

    Free Member
    May 27, 2007
    1,080
    283
  • #13
    Claire, I would suggest that HMRC have misled you.

    The legislation is clear that for a restriction in CGT main residence relief to apply part of the property must be used exclusively for the purpose of the trade or business (TCGA 1992, s 224(1)). (emphasis added).

    Hope this helps
     
    Upvote 0
    dctrpl

    dctrpl

    Free Member
    Dec 9, 2007
    127
    1
    Scotland
  • #14
    Basement_Studios_Ltd said:
    When we are doing use of home what we tend to do is work out cost of having the house (if you have a home-office), count number of rooms in house, then divide cost by rooms (I've had approved by IRev).
    Click to expand...
    :|
    So does this work out like this?:

    1 years electric = £360
    1 years rent = £6000
    1 years gas = £360
    1 years phone = £360

    = total £7080

    THEN divide by 3 (house with three rooms: living, bed, office)

    = £2360 of allowable expenses:)
     
    Upvote 0
    Log in to reply

    Latest Articles

    Top Bottom
    Community
    Articles
    Menu