Share this content

Ltd registered contractor WFH - home renovation

Can ltd registered contractor WFH claim part of bathroom and kitchen renovation

Didn't find your answer?

A contractor works under own registered Ltd. Pre-Covid he worked from clients offices. Since March 2020 he has been wrking from home. Obviously, home wear and tea has increased. There is a leakage in bathroom and problems in the kitchen, both requiring renovation. Can ths person claim part of renovation expenses as business expenses via his ltd? If yes, what persentage?

I have seen an example about renovating home office which was legitimate to claim.

This person works from his living room.

Replies (23)

Please login or register to join the discussion.

avatar
By Hugo Fair
01st Aug 2021 23:28

Can you explain the basis on which you believe (or hope) that "a leakage in bathroom and problems in the kitchen" have any relevance to WFH?
Who owns the premises on which "renovation expenses" are to be incurred - the individual or the limited company?
Are you aware of the likely impact of CGT when the property is sold, if some or all of the property has been defined as business premises (rather than a personal residence)?

Thanks (1)
RLI
By lionofludesch
01st Aug 2021 23:29

Good luck with that.

I think the tea would be ok, so long as it's not excessive and is drunk during office hours.

Thanks (2)
Replying to lionofludesch:
avatar
By Tax Dragon
02nd Aug 2021 09:17

lionofludesch wrote:

I think the tea would be ok, so long as it's not excessive and is drunk during office hours.

Is there a connection between the excessive consumption of tea and the leakage in the bathroom?

Thanks (0)
Replying to Tax Dragon:
RLI
By lionofludesch
02nd Aug 2021 10:34

Tax Dragon wrote:

Is there a connection between the excessive consumption of tea and the leakage in the bathroom?

I think you've got something there......

Thanks (0)
Replying to lionofludesch:
avatar
By Tax Dragon
02nd Aug 2021 10:39

...but I didn't like to speculate about the problems in the kitchen department...

Thanks (0)
Replying to Tax Dragon:
avatar
By Mr_awol
02nd Aug 2021 10:51

The problems in the kitchen department led to a blockage in the bathroom which, combined with the excessive tea, created the leak.

Can the company claim tax relief on provision of healthier option meals for its staff, if the cost of those meals is less than the cost of a new bathroom?

Thanks (0)
Replying to Mr_awol:
avatar
By Tax Dragon
02nd Aug 2021 11:09

It seems my humour is more toilet-based than yours. I feel shame. Your joke is about principles of tax. Mine is about wee-wee. For sale, username "Tax Dragon". Reason for availability: brought into disrepute by the current owner.

Oh, before I sell up... yes, the company can obtain tax relief on employment costs it incurs. It's (normally, and as usual) the wrong question. The question should (normally) be about how much of that cost is taxable on the employee under ITEPA 2003. (Some believe in an addback under DLA 1998 instead.)

Thanks (0)
Replying to Tax Dragon:
paddle steamer
By DJKL
03rd Aug 2021 11:26

Before you sell I would snaffle up some of the available domains to package with the name, here are a few that appear available.

https://www.123-reg.co.uk/domain-search/?domain=tax%20dragon

Thanks (1)
avatar
By David Ex
01st Aug 2021 23:32

habibla wrote:

I have seen an example about renovating home office which was legitimate to claim.

Can you post a link to that example?

Thanks (2)
avatar
By DKB-Sheffield
01st Aug 2021 23:35

I think rather than asking if he COULD claim, it's easier to explain to the client why he COULDN'T.

The repairs are a normal household cost, in rooms that are primarily not used by the business, and they would have existed/ needed repairing whether the client worked from home or not. I don't think any argument of increased wear and tear (or even excessive "tea" as stated in error by the OP- but highly relevant) could be deemed to cause this. I suppose if the client is a plumber practising on his own pipework and causing a leak, there could be grounds (I'm not suggesting the cost would be allowable in that case though)!

Furthermore, you refer to the cost of renovating a home office. Clearly this is slightly different as the room is (assumedly) used primarily for business purposes. Even so, there a likely to be further implications (CGT etc.). However, as the client works from his living room, this is unlikely to be relevant.

For some reason clients do believe that, by working from home, every household cost is relievable. I had a client a few years back trying to claim for a home cinema for a "man cave", which they allegedly purchased "in case they needed to invite clients round for a presentation" (honest!!!).

Read up on what is allowable for home office expenditure AND what evidence/ processes are needed if your client is claiming more than the flat rate.

Thanks (0)
Replying to DKB-Sheffield:
avatar
By AndyC555
02nd Aug 2021 09:39

"I had a client a few years back trying to claim for a home cinema for a "man cave", which they allegedly purchased "in case they needed to invite clients round for a presentation" (honest!!!)."

When I was still working for the Revenue, I had a case where a company tried to claim the cost of a motor boat as wholly business with no BIK as "the Directors find holding board meetings there is more relaxing and they get more done"

Thanks (0)
avatar
By SXGuy
02nd Aug 2021 07:16

If he had been working from other people's offices still. Would the bathroom still need doing?

I think you know the answer, actually surprised by the question tbh.

Thanks (2)
avatar
By Tax Dragon
02nd Aug 2021 07:20

Assuming the company doesn't own the property, these are surely personal expenses paid by the employer.

Assuming the company isn't within IR35 and gets a deduction for its officers' and employees' pay packages, why would these payments not be allowable?

Thanks (0)
avatar
By BudgetB
02nd Aug 2021 08:31

Tea is life

Thanks (1)
avatar
By AdamMurphy
02nd Aug 2021 09:13

Why not claim the holiday costs too as R&R, rest and relaxation.

Thanks (0)
avatar
By habibla
02nd Aug 2021 10:40

Here is what costs ACCA suggests could be apportinoed:
https://www.accaglobal.com/sg/en/technical-activities/technical-resource...

Thanks (0)
Replying to habibla:
avatar
By Tax Dragon
02nd Aug 2021 11:12

Now read s336 ITEPA 2003 and see what you think.

Thanks (1)
Replying to habibla:
avatar
By David Ex
02nd Aug 2021 11:40

habibla wrote:

Here is what costs ACCA suggests could be apportinoed:
https://www.accaglobal.com/sg/en/technical-activities/technical-resource...

There’s a paragraph which may be relevant:

“Expenses incurred for a dual purpose (both business and private) can only be claimed if it is possible to identify a specific part used for business. If it is impossible to identify and measure the proportion of the cost incurred which relates only to business, no amounts can be claimed.”

Thanks (0)
avatar
By lesley.barnes
02nd Aug 2021 11:23

I thought this person was an employee of his own limited company.
www.gov.uk/tax-relief-for-employees/working-at-home.

I honestly can't see how this person can claim for kitchen and bathroom repairs. Does the company pay your client rent for using the property and does the client declare the rent on his tax return? Why do you think that he can claim? Even on ACCA's example Gazelle v Servini [1995] STC 324 there is no mention of a kitchen or bathroom as part of the apportionment.

Thanks (1)
avatar
By habibla
02nd Aug 2021 11:41

Here is an example of apportioning house exterior painting costs (example 5).
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47825

Thanks (0)
Replying to habibla:
avatar
By David Ex
02nd Aug 2021 12:59

habibla wrote:

Here is an example of apportioning house exterior painting costs (example 5).
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47825

That link also says:

“Chris does not use her dining room for business purposes. The cost of redecorating the dining room is not an allowable expense.”

What business purpose is served by your client’s kitchen and bathroom? Establish that and you should have your answer.

Thanks (1)
Replying to habibla:
avatar
By DKB-Sheffield
03rd Aug 2021 02:41

Your client works in the living room. Assuming your client does not spend a significant portion of the working week in the kitchen (e.g. contract caterer) or bathroom (not sure that's a question I'd wish to pose to a client), any use of those rooms is incidental. Therefore apportioning any of the costs of refurbishment/ repair (even as a sole trader/ partner) would almost certainly be disallowed.

Incidentally...
Your client is not having the exterior of their home painted so... that is a complete red herring.
Your client is an employee of a limited company hence BIM47825 is irrelevant.
As explained by others, review s336 ITEPA 2003 (or EIM32810 for a brief summary per HMRC) as opposed to documents not related to your client's case.

If, after all of the above, you still feel your client is right to make a 'claim' you should advise accordingly and advise of the correct process to be followed (likely UK Property on SATR).

Be careful however that you make an informed decision to determine a correct result... as opposed to trying to justify decisions already imposed on you by a client! You are the advisor NOT the advised!

Thanks (0)
Replying to DKB-Sheffield:
avatar
By Tax Dragon
03rd Aug 2021 07:38

Well said.

And just to add... although that ACCA article sought to pick out the common ground between the rule for employees and that for the self employed, I'm not sure how helpful that is - unless it also at least mentions that there are differences. Which the article fails to do, btw. That failure has clearly confused our OP into thinking s336 ITEPA is the same as s34 ITTOIA (and therefore that BIM is somehow relevant here). OP, to see how wrong that is, just read the two sections side by side. Go on, just have a look.

(The wholly and exclusively rule applies to the company. Pop s54 CTA 2009 next to s34... now you're talking similar. If the company does pay, the payment would likely form part of the employment income of the director. The company would therefore likely get tax relief for it. As has been said above.)

Thanks (0)
Share this content