Apportionment of home R&M costs for sole trader

Apportionment of household repairs and maintenance costs for sole trader

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Artist client who works from home using a couple of rooms as studio and showroom (not "exclusive" use so don't see any CGT issues.

I would say floor space used is 25% of the total house space. During the year he has rewired the house and redone the bathroom and kitchen (similar standard).

Can we include the costs of these as part of the total costs of running the house and then apportion 25% to his business?

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RLI
By lionofludesch
06th Jan 2018 11:12

You can. It's a judgment call.

But, personally, I wouldn't include the kitchen and bathroom costs. I would see that as "agrgessive".

If I did include anything, it'd be based on the use of the kitchen and bathroom for business. Which I suspect is a lot less than 25%.

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By Adam12345
06th Jan 2018 11:57

Firstly, the question is whether the they where incurred wholly and exclusively for the purposes of the trade. i'd say they were not. I'm pretty sure that they would need a kitchen and bathroom regardless.

Next, you need to consider revenue vs capital expenditure...

Finally, if they use 25% of the floor space for business but the 25% of floor space is also used personally, I would say that the 25% of floor space has to be apportioned between private and business use as well.

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By andy.partridge
06th Jan 2018 13:05

I would exclude the kitchen and bathroom from the floor space calculation and omit the kitchen and bathroom costs.

I agree with Adam - if on the one hand you are saying the use is not exclusive as a get out of jail card for CGT, you need to account for that non-business use in your calculation for income tax purposes.

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