Re: FN-FORUM: income tax (uk)

date posted 8th January 2008 12:54


On 8 Jan 2008, at 13:32, Rob Colton wrote:

>
> I've asked my accountant this very question a few times. Their
> advice is
> mixed, although based on the fact I own my house rather than rent.
>
> They say do it but be careful and probably best to tell taxman
> upfront so he
> can send letter approving your scheme.
>
> Their advice on setting payments is keep it small. Don't do it if
> you are
> using a shared living/working space. But there is in their eyes no
> difference between you renting a portion of your dwelling to your
> business
> and renting space in a shared office in a commercial premises. It's
> just the
> taxman is of the opinion that we are all criminals and will assume
> you are
> on the make.
>
> Another piece of advice they give is back it all up with paperwork.
> Invoice
> your business each month so you have a piece of paper detailing the
> payments
> and even write a contract between you and the business detialing
> what will
> be provided (electric, gas, space, etc) each month and at what cost.
>
> That's it.


The downside of doing this AIUI relates to the possibility of your
local council slapping a business rate on the portion of your house
used as an office, and the possibility of capital gains tax being
applied when you sell, as part of the property was commercial in nature.

the workaround again AIUI and IANAL is that you have partial use of
the room - e.g it also is a bedroom, with a bed in it, or a dining
room/office area etc.

a dedicated room, set up as an office, being claimed for against
income tax will more than likely attract business rates and CGT.


YMMV

Get proper legal advice for your exact personal circumstances and
remember that the sun may go down as well as up....

;o)