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Apportionment of costs for use of home claim

Method of apportionment of costs for use of home claim

Client (a sculpter) uses 2 rooms in her house for business for most of the day often working well into the evenings (not exclusive use rooms - the rooms do get used for other purposes like entertaining, guest room occasionally etc) total square footage of 2 rooms is 600 sq feet. House has 2 other reception rooms (500 sq feet in total), 4 bedrooms (1,000 sq feet), kitchen (150 sq feet), 2 bathrooms (180 sq feet) and corridors, halls etc (400 sq feet).

Total house floor space is 2,830 sq feet. Running costs of house are mortgage interest 4,000 plus utilities 2,000 plus council tax 2,500 total 8,500.

HMRC say you can apportion costs on a reasonable basis and gives examples.

Could you include the 2 rooms plus one bathroom and the corridors as all being used by the business so 1090 feet as a % of 2,830 so 38%?

Then for time allocation take 90% for the 2 main rooms which are used most of the time and 50% for the corridors and bathroom which are used from time to time during the day?

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17th Jan 2018 11:10

Functional rooms like kitchens and bathrooms are usually excluded from the calculation. I'd just apportion on the basis of the two business rooms against the remaining rooms, restricting the claim for private use, if significant.

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to lionofludesch
17th Jan 2018 11:20

To add to Lions suggestion we apportion the room use by hours. So business, private and empty and then apportion away the private use. I recommend that at least 1 hour a week be private to stop the exclusively rule which can affect a CGT calculation.

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to lionofludesch
17th Jan 2018 20:29

I made a comment about this - see below - sorry I cannot work out how to link to my comment.

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By DJKL
17th Jan 2018 11:46

How do you get 90% use of the two rooms, does she never go away to their bedroom to sleep?
90% suggests she is occupying them both 21.5 hours a day 7 days a week.

I suppose I could argue part of my study at home is used 24 hours a day solely for my business as it has a large shelving unit with client files in it and textbooks along the top, the shredder permanently occupies a floorspace and the printer sits on part of the desk and never gets moved, however the desk and chair are used for non business purposes (I sit at one ,on the other ,to smoke a cigar after my evening meal) and the room is used for other things apart from accounts work- I have never claimed anything like 90% use.

Re corridors if room is in use 90% of time (which as above I really doubt) then corridors surely have to match, they need to be available at all times rooms are being used as a means of escape if fire etc.

By the way, some very big rooms in that house, bedrooms averaging 250 sq ft each are pretty large bedrooms, usually one gets 2 larger and two smaller.

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to DJKL
17th Jan 2018 12:26

She doesn't have to be in the room to use it for business.

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By DJKL
to lionofludesch
17th Jan 2018 13:25

But where the rooms have duality of use (business/personal) how does one apportion the total non use by anyone/anything periods (when nobody or nothing is using /occupying a particular sq ft)

For instance my room (which is very small) has 50% as open floor, nothing occupies that bit of the room when I do not walk over that square footage, is that area business or personal when not occupied or is it considered apportioned in ratio to the business/personal use that actually occurs.?

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to DJKL
17th Jan 2018 13:32

One uses Accounting Estimates - better known to laymen as "Guesses".

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17th Jan 2018 12:39

Yes it is a lovely house with large airy rooms, high ceilings etc. The reason I suggested 90% for the 2 main business rooms is that those 2 rooms are set aside most of the time for use by the business and even when she she has gone off to bed the rooms are still storing materials, products etc.. I thought about taking 10% off as a nominal contribution to private use (entertaining, guest room occasionally etc)

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17th Jan 2018 20:29

Not wishing to be rude, I would like to say that there is no basis for the comment 'Functional rooms like kitchens and bathrooms are usually excluded from the calculation. ' at the start of this thread. That particular house may have been purchased with the business in mind and if you are doing work where you need water etc then why not apportion based on use. There is a guide (freeview) here https://www.rossmartin.co.uk/self-employed/what-expenses-can-i-claim/631...

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to Nichola Ross Martin
17th Jan 2018 23:41

To be fair, Lion did say “usually”.

It was an assumption that we all made, and would probably make every time.

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to Nichola Ross Martin
18th Jan 2018 07:42

Nichola Ross Martin wrote:

Not wishing to be rude, I would like to say that there is no basis for the comment 'Functional rooms like kitchens and bathrooms are usually excluded from the calculation. ' at the start of this thread. That particular house may have been purchased with the business in mind and if you are doing work where you need water etc then why not apportion based on use. There is a guide (freeview) here https://www.rossmartin.co.uk/self-employed/what-expenses-can-i-claim/631...

Sure - the only rule is there are no rules. A cookery writer may well have an abnormal business use of the kitchen, for example.

Nevertheless, my impression, right or wrong, is that most business use of home is clerical and I stick by the word "usually".

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18th Jan 2018 09:46

Thank you for useful feedback. Always difficult to define reasonable! Nichola's guide is very helpful and gives a reasonable base point for reasonable (then let HMRC argue the toss if they want)
My client works 50 to 60 hours a week from home.
Certainly the 2 big rooms are used primarily for business (sculpting, showroom, storage etc) so 90% seems very fair. One bathroom, kitchen and the corridors are dual use so I believe 50% would be okay.
Taking these numbers gives 90% x 600 sq ft; 50% x 640 sq ft. Total apportioned to business 860 sq ft which is 30% of floor space.
Running costs are 8,500 so propose claiming 30% x 8,500 for use of home.
May be a little aggressive but don't feel it's totally unreasonable.

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