Contribution to use of home

Contribution to use of home

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A self-employed individual claims a business use of home expenses, calculated along the principles set out in HMRC manuals and examples listed therein. That individual, who finds it difficult to make ends meet, also receives periodic (some regular) payments from close family members, to "help out". The payers expect these contributions to help toward living costs. The question before me is whether those contributions act to restrict the business deduction claimed.

As I see it options are:

1) Deduct the contribution from private elements of expenses first, and only if there is a surplus contribution over the private element would you consider restricting the business claim by that excess.

2) Deduct the contribution from the total expenses and then consider the business private split of what remains, based on usage. Ie a pro rata allocation of the contribution

3) Ignore the contribution altogether, as being an outright gift out of natural love and affection etc etc with insufficient connection to the expenses

4) Other (specify)

Waddayathink?

With kind regards

Clint Westwood

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By chewmac
21st May 2015 22:23

I would probably ignore
The living costs they contribute to could also be groceries, car etc. So only a proportion would be towards home. Even if you reduced his home costs by a proportion of the contribution I'd be surprised if it had a material affect on his claim. But, I think I'd be inclined to ignore it. What might sway me is how the client views the contributions/ how he explained them to you.

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