Can We Pay A % Of Our Home Rent For A Home Based Business?

[British-Food-Shop]

Can We Pay A % Of Our Home Rent For A Home Based Business?

Hi All

We run a online business from home.

I have been told that as we rent our house we can pay a % of the rent from our business account.

Can anyone confirm this is true, or what % we can pay from the business account?

Many Thanks in advance.

Stuart

 

[Scalloway]

If you are a sole trader or partnership it is ok to claim a proportion of your house rent against your taxable earnings. If you use a room calculate the percentage of the floor area to get a figure.

If you are a limited company it is more complicated as the rent from the company becomes taxable income in your hands.

 

[bargincards2011]

this might sound like a good idea but if your rent includes council tax then this might go up each month too....

 

[British-Food-Shop]

Many Thanks for your fast reply.

Yes we are a Ltd company.

Do you have anymore advice/details?

If you are a sole trader or partnership it is ok to claim a proportion of your house rent against your taxable earnings. If you use a room calculate the percentage of the floor area to get a figure.

If you are a limited company it is more complicated as the rent from the company becomes taxable income in your hands.

 

[Scalloway]

Try this article

http://www.suretax.co.uk/What-are-the-Benefits-of-Working-from-Home.aspx

 

[British-Food-Shop]

That is a minefield!!!

Can I send you a PM with more details?

Try this article

 

[Scalloway]

I'd prefer not to get involved in anything more than posting on this forum. If you do not have an accountant I suggest that you find one.

 

[British-Food-Shop]

I hate to think what it would cost to send our "books" to the Shetland Islands!!!

I'd prefer not to get involved in anything more than posting on this forum. If you do not have an accountant I suggest that you find one.

 

[MyAccountantOnline]

Can We Pay A % Of Our Home Rent For A Home Based Business?

Hi All

We run a online business from home.

I have been told that as we rent our house we can pay a % of the rent from our business account.

Can anyone confirm this is true, or what % we can pay from the business account?

Many Thanks in advance.

Stuart

Hi Stuart

Yes you can certainly charge your company rent for the use of your home. You should charge a proportion of your household costs based on the area used and the time it is used. The income has to be declared on your tax return but provided you personally dont make any profit on the income it wont create any tax liability for you and will save the company tax.

 

[British-Food-Shop]

Hello Nicola.

Many Thanks for your very helpfull reply.

Can you advise on what the % will can pay for using the home % for business please?

Stuart

Hi Stuart

Yes you can certainly charge your company rent for the use of your home. You should charge a proportion of your household costs based on the area used and the time it is used. The income has to be declared on your tax return but provided you personally dont make any profit on the income it wont create any tax liability for you and will save the company tax.

 

[MyAccountantOnline]

Hello Nicola.

Many Thanks for your very helpfull reply.

Can you advise on what the % will can pay for using the home % for business please?

Stuart

You need to do some calculations Stuart or get your accountant to do them for you - it will depend on your personal circumstances etc which I'm sure you dont want to post on a public forum

 

[British-Food-Shop]

Thank you for your reply and PM (copy below).

Not really helpfull unless I get my cheque book out ~ Is it???

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Hi Stuart

I am always very happy to give general advice and pointers on the public forum but specific advice is only for paying clients as I am sure you will appreciate.

If you are seeking an accountant I'd be delighted to help.

Kind regards

Nicola

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You need to do some calculations Stuart or get your accountant to do them for you - it will depend on your personal circumstances etc which I'm sure you dont want to post on a public forum

 

[Scalloway]

Speaking as an accountant myself I offer general advice that will be of help to more than the poster of the original query. As you say there comes a point where specific advice is needed and payment is expected in return.

But to return to your query. Measure up the floor area of your flat. Calculate the percentage that relates to the business. Apportion this percentage of your rent to your business. You can apply the same principles to heat and light etc.

 

[MyAccountantOnline]

Thank you for your reply and PM (copy below).

Not really helpfull unless I get my cheque book out ~ Is it???

----------------------------------

Hi Stuart

I am always very happy to give general advice and pointers on the public forum but specific advice is only for paying clients as I am sure you will appreciate.

If you are seeking an accountant I'd be delighted to help.

Kind regards

Nicola

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I think in fairness Stuart most accountants here would have responded in that way to a PM from someone asking for specific advice.

If you dont want to pay for specific advice read my reply again and you should be able to do some calculations

 

[DeanCo]

Can you advise on what the % will can pay for using the home % for business please?

Stuart

You can use bills for your house or any property as business expense if they are soley for business use according to how much of your house is being used for business e.g. if your house has six rooms of approximately equal size and two of them are used as a home office and store room then you can claim 33% for heat, light, insurance, rent or mortgage interest, water, telephone etc.

In addition to working out the % of your house that you have dedicated to business, you may also need to time apportion some allowable expenses e.g. if a room is used for business 6 hours per day, you can claim 50% of the utility cost relating to that room because it is effectively used for business 50% of the day.

There are other ways of calculating the percentage of household bills you can use as an allowable expense e.g. for different room sizes it would a matter of calculating the sqm is for business use.

 

[KateCB]

Stuart, this forum is for general advice, all accountants charge for what they do - it's how they make their living - do you give your services/goods away free? If a customer asks for general advice on say 'how to I re heat this pie' would you offer to go home with them, look at their oven, calculate how hot it actually gets (as opposed to what the read out says!) and re-heat said pie - for free?

I have had some excellent free advice from general advice given to me by Nicola and other accountants on this forum, sometimes it is in the form of a link where I can research the question, others have been 'speak with your accountant' as what I wanted was too specific/in depth to be considered either general or free.

An offer to use expertise to look at something specific, in depth, do the math and to provide the answer for a fee isn't unreasonable is it?

 

[KateCB]

Also remember that if you are using a specific room in the house for business and claiming for it, then there will be CGT to pay on that proportion when you sell your house too, as it is not your primary place of residence, but a commerical/business area! HMRC get you all ways round!

 

[DeanCo]

There is not usually an issue with CGT if your house is your main residence, so long as no part of the house is used exclusively for business. If you share part of the house for business and private use then, usually the whole house will be classed as residential and you won't have to pay any CGT when you come to sell it.

 

[MyAccountantOnline]

Stuart, this forum is for general advice, all accountants charge for what they do - it's how they make their living - do you give your services/goods away free? If a customer asks for general advice on say 'how to I re heat this pie' would you offer to go home with them, look at their oven, calculate how hot it actually gets (as opposed to what the read out says!) and re-heat said pie - for free?

I have had some excellent free advice from general advice given to me by Nicola and other accountants on this forum, sometimes it is in the form of a link where I can research the question, others have been 'speak with your accountant' as what I wanted was too specific/in depth to be considered either general or free.

An offer to use expertise to look at something specific, in depth, do the math and to provide the answer for a fee isn't unreasonable is it?

Thank you Kate

 

[British-Food-Shop]

Spoken like a good old penny pinching Yorshire lass/person...

Stuart, this forum is for general advice, all accountants charge for what they do - it's how they make their living - do you give your services/goods away free? If a customer asks for general advice on say 'how to I re heat this pie' would you offer to go home with them, look at their oven, calculate how hot it actually gets (as opposed to what the read out says!) and re-heat said pie - for free?

I have had some excellent free advice from general advice given to me by Nicola and other accountants on this forum, sometimes it is in the form of a link where I can research the question, others have been 'speak with your accountant' as what I wanted was too specific/in depth to be considered either general or free.

An offer to use expertise to look at something specific, in depth, do the math and to provide the answer for a fee isn't unreasonable is it?