I'm getting confused here. I believed what you were saying was indeed correct but Tim is suggesting that anything over 10 per week would sound alarm bells with the IR.
The potential amounts here are far more than this, ie 25% of 500pcm rent,
25% of 120pcm (averaged) council tax, plus an element of gas electricity and water.
It is necessary to distinguish between claiming some sort of round-sum allowance for business expenses, as in your case for working at home, and a proportion of some expenses where it is necessary to have a room(s) specifically set aside for business use.
When working from home I had telephone voice line rental disallowed as there was only one voice line, even though the business could not have functioned without a phone. £250 heat and light allowance was never queried though, but if it had I could have shown from the billing history that this was a fair assessment of the extra costs caused by running my home office.
I have heard this about telephone line rental since it is a facility you make use of privately. However the cost of calls and services primarily used for business purposes I thought were allowable. In my case redirection services and associated call charges.
I also have a second line which I use for making business calls and I believe (hope) this is treated differently and fully allowable.
Many people use their home as a second office. My home is my place of work and even my garage is used as a store and workshop.
I was referring to line rental as opposed to call charges
Yes it will.
They are aren't they.
Do you really think that the revenue will consider 125 pm rent (for use of own house) as reasonable? Apart from the fact that it seems that you don't use the room exclusively for business purposes there is the more important consideration of marginal costs. You are saying that you use (example) one bedroom of a two bedroom house for your business and want to charge a quarter of the rent. But does a two bed house costs 33% more to rent than a one bed house (usually not, the marginal cost is nearer 10 %)
Others have said that you cannot claim this at all. I am in agreement with them If you didn't have this room that the business is using, because of the banding, it is likely that your Council Tax bill would still be the same.
This bit is OK to claim extra, but it is likely to be tiny you will usually need to keep a house reasonably warm during the day even when empty.
If unmetered, the same arguement with the council tax applies. The element of the bill that is there because of the business is zero. This is the amount that you can claim.
You cannot just pro-rata all of your bills just because you are running a buisness from one room. You can only claim the *extra* costs of that business being there.
tim
That's not my experience with IR. They normally accept without question a reasonable proportion of household bills, around 25% in most cases, without going into the details of what proportion of council tax banding is directly attributable to business use etc.
Alec
The line rental does not change whether you use the phone for business use or not. So, whilst you may be able to point to specific calls as business calls, when you contract with BT or whoever for the telephone you sign up for the line rental, so that is a personal expense.
Of course, if you have a second line and the employer contracted to supply this line, and private use is prohibited, then this would of course be allowable.
I know some bright spark is going to point out that it is difficult for a company with only one director, to purchase a telephone line and forbid its only director from using it for private use, one has to take the reasonable line.
Simon
Please dont confuse acceptance with the policy of process now, check later.
The IR does not vet every company return or SA return, let alone every P14 and P11D.
It is only a very small amount that are looked at and these are risk assessed so that only the more extravegant or obvious ones that are looked at. even then, they may not enquire as the cost of opening an enquiry is not an inconsequental sum.
So, as has been said by more than a few here, be reasonable, dont get greedy and you can put proportions of bills down.
However, if the returns do get taken up for enquiry, and you have been a bit, adventurous, in the claim for expenses, dont be too surprised if you get pulled up in detail if you are not able to substantiate your claim.
Its worthwhile remembering that S198(1) ICTA 1988 or S336 ITEPA 2003 is not necessarily your friend, even though that is the relieving provision.
Simon
I think it does. I'm sure our line rental at work is more than mine at home. BT differentiate between business and domestic customers.
Neb
You as the customer have the choice of requesting a residential line or a business line. In practice BT don't seem to care which you take up.
In the case of a fault BT prioritise business customers and guarantee that work will be carried out within a day before compensation is paid out. If residential you're talking a week. However it's a lot to pay for peace of mind when they transfer calls to a mobile in case of a fault.
Why do you think that? I'd say it's the opposite. If I got a telepone line that I didnt want to use privately I wouldnt use it privately.
Please explain what is so difficult about it.
What you are refering to is the way BT charges a higher rate of line rental to business users.
What I was refering to was that I have a set line rental for my home phone. If i start using my home phone for business use, my call costs will increase but my line rental will not, unless I was stupid enough to tell BT that I wanted a business use line and then they would gladly increase it.
Simon
Sorry Peter, but if joe bloggs the director is the sole director and forbids himself from using the phone for private use and then uses it to make a private call, is he going to take himself to one side and give himself a good talking to.
Simon
Would having a 'business' line not assist you in persuading the Inland Revenue it was a legitimate expense?
It is also essential to get your name in the business pages of the phone book, and allows you a free entry in Yellow Pages.
Neb
A business rental just gets a quicker response to faults. I have residential lines but I still get a free line entry in yellow pages.
No. He obviously hasn't forbidden himself then has he if he's still using it. If he can't get himself to follow his own rules it's his fault. People should show self disciple in cases like this. I know some people don't have any. My clients walk round with business cards and personal cards but still cant bring themselves to make the effort to use the right one.
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