Claiming rent and other expenses from rented property

Claiming rent and other expenses

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Hi,

I am currently renting a property. I obviously live there but I also use it for work purposes (I work for clients remotely sometimes, I also use it to do research for my work and the admin for my company). For this I use two rooms in the house.

My question is can I claim back the rent, water rates, electricity, broadband? According to this website: https://www.crunch.co.uk/blog/startup-advice/2013/07/17/hmrcs-home-offic..., all I need to do is setup another rental agreement which rents out the property from myself to my company. 

I would like to know if that is a sound way of going about it or is there a better approach.

 

Mike

Replies (18)

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RLI
By lionofludesch
20th Aug 2016 15:42

Are you permitted to sublet ?

If not, there's the end of that plan.

The company can pay you for working at home. The money's tax free in your hands and allowable for the company. It's not hugely generous - how much were you thinking of renting the property for ?

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By mike2016
20th Aug 2016 17:10

I was going to charge 2/9 of £1750 as I am only using 2 rooms out of the total of 9 rooms in the house.

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Replying to mike2016:
RLI
By lionofludesch
20th Aug 2016 17:52

And £1750 comprises what ?

Rent for the year ? Month ? Gas ? Electric ? Water ? Cleaner ? Septic tank ?

Don't be shy.

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Replying to lionofludesch:
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By mike2016
20th Aug 2016 19:36

That's the rent.

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By Manchester_man
20th Aug 2016 19:18

Apologies, but this is a pet hate of mine...

Why on earth would you be able to "Claim back" your rent?

Unfortunately, you are far from alone in your misguided belief.

What you presumably want to know is "Can i claim tax relief on my rent".

Rant over.

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Replying to Manchester_man:
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By mike2016
20th Aug 2016 19:38

Feeling better now lovie?

I'm just fact finding. You all may be highly qualified accountants or whatever but I know absolutely zero about tax laws and rules. I'm just seeing what I can and cannot claim.

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By mike2016
21st Aug 2016 03:26

Yes that's right : can I get any tax relief on the rent etc.

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By mike2016
21st Aug 2016 03:27

Yes that's right : can I get any tax relief on the rent etc.

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paddle steamer
By DJKL
26th Aug 2016 12:24

Lot more questions to answer, including:

1. why two rooms if only one of you?

2. what are rooms used for when you are not working in them?

3.Are all rooms in property same size and therefore would 2/9th be reasonable?

I can however confirm that you may well get tax relief re accountancy fees.

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Replying to DJKL:
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By mike2016
26th Aug 2016 16:33

1. One room has got all the IT equipment (desktop computers, laptops, printer, monitors) - I'm in IT and I need various computers with different setup to test software.

2. The other room I use for R & D - study, reading, filing cabinets for company documentation

3. Both rooms are similar in size

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Replying to mike2016:
paddle steamer
By DJKL
26th Aug 2016 17:24

What about when not working, do you/family use these rooms for anything else, homework, internet browsing?

The fact is that most people with a home office do use it for non business purposes, whilst my study is mainly full of client files and even has shelving designed to fit lever arch files (a wall of them) and is set up as an office for the practice, I could never say business use is exclusive, I sometimes use it to hide from the family/get some peace and quiet / browse for garden railway sleepers or cheap bricks on gumtree /look on e bay /answer A Web posts- I cannot argue exclusive use and hence cannot argue 24 hour use based on pro rata square footage

As a sole trader each year I used to do a detailed apportionment of actual costs based on square footage (my room/divided by total room sizes (ex kitchen/ bathroom) adjusted for time used) which tended to come out at about £400 per year, as a limited company I suspect I could do a licence to occupy to my company, but life is too short so I claim the "non receipt based" £4 per week from same as it is simple and ,given mixed use, close to reasonable.

Only you can judge what would be reasonable and capable of defence if HMRC took an interest, in my case I work a minimum of 35 hours a week outwith the house (the day job) so a bit tricky claiming 24 hour use when I am not at home that much.

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Replying to DJKL:
RLI
By lionofludesch
26th Aug 2016 17:40

We haven't established whether he can sublet yet.

I did have a client who spent hours working out his exact costs to some spurious accuracy and came up with a figure £67 more than the "simplified expenses rate". When I remarked that it seemed like a lot of effort for very little reward, he said "Well, £67 is £67 and it's better in my pocket". He was gutted when I pointed out that £67 is actually £13.40 at 20% - though his spirits rose slightly when I added the £6.03 Class 4 NIC.

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RLI
By lionofludesch
26th Aug 2016 13:14

What are the nine rooms ?

I ask because bathrooms and kitchens don't count.

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RLI
By lionofludesch
26th Aug 2016 13:14

What are the nine rooms ?

I ask because bathrooms and kitchens don't count.

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Replying to lionofludesch:
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By mike2016
26th Aug 2016 16:35

in that case there are only 6 rooms ( I'm including the attic here as that is where I store my IT equipment)

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Replying to mike2016:
RLI
By lionofludesch
26th Aug 2016 17:10

So - back to the crucial question.

Can you sublet ?

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Replying to lionofludesch:
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By pacta
26th Aug 2016 16:41

What if he works in his kitchen?

Perhaps we should use the number of flat table surfaces in the house as the denominator instead of rooms.

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By pacta
26th Aug 2016 16:39

Why don't you call Crunch?

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