I am preparing accounts and tax for a company that the owner uses for his business as a general builder. I have calculated the additional expenditure he can claim for using one room as an office for 3/4 hours a week. This is £378.62 and so I will use this instead of £4 a week.
The company also uses one room in the house for storage purposes - there is no garage. Based on the assumption that materials and tools are stored there 24 hours a day, then my calculation of the additional expenditure is £1,811.10. This includes 20% (one room of 5) of mortgage interest, electricity etc.
Would you:
(a) also enter this on the personal tax return, claim expenses and end up with nil taxable income
(b) enter as a company expense, but make no tax return entry
(c) do an agreement for storage charges of £200 a month, which is not an unreasonable amount for the company to pay, then show £2,400 rent received on the personal tax return, expenses of £1,811, net income of £589.
Any thoughts would be welcome
Replies (7)
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Rewriting history?
Are you saying that there was no rental agreement in place between the owner and the company for use of the premises?
On what basis is it allowable?
there was no rental agreement in place.
The company has not incurred expenditure so it cannot be an allowable deduction for the company. I also cannot see a valid claim as an employee - no additional expenditure has been incurred for storage (presumably there is no need to light and heat the storage area), and other domestic expenses probably aren't allowable.
It would be best to setup a rental agreement between the company and the individual for the storage space going forward, but this won't help for past expenditure.
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there was no rental agreement in place.
The company has not incurred expenditure so it cannot be an allowable deduction for the company.
Would the same apply to the accountancy accrual if there was no documented agreement with an accountant at year end?
Presumably insofar
Would the same apply to the accountancy accrual if there was no documented agreement with an accountant at year end?
Presumably insofar as there was no agreement in place for the period for which an accrual would be made.
You do know
That your storage space will not be eligible PPR if your client sells the property?
Personal allowances using prior to dividends
HI there
when using an individuals PA as a salary (using as taxable expense within a company, Should the level be £7755 up to NHI threshold or tax threshold of £9440. There is no PAYE scheme , but would this make any difference
Dont want to get caught out with client getting charged NHI employees and emplyers rate if i use £9440
Your thoughts would be appreciated