Question – can landlords claim for use of home as office?

Question – can landlords claim for use of home as office?

14:22 PM, 13th August 2013, About 8 years ago 11

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I am employed full time and have one buy to let property managed by a letting agent. can landlords claim for use of home as office

I have claimed £4 per week for using my home as office but the tax man is telling me that I cannot claim this.

Can somebody tell what the correct position is please?

Thanks in advance

James Cunningham



Comments

by Mark Alexander

14:25 PM, 13th August 2013, About 8 years ago

That doesn't sound right to me. Have you got a letter from them and if so what does it say?
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by Neil Barlow FCCA ATT

16:16 PM, 13th August 2013, About 8 years ago

Hi James,

Mark has asked me to comment on your post.

Landlords may make a claim for using part of their home as an office when dealing with their rental portfolios, although if a letting agent is managing the properties it may be difficult to justify a claim. The claim is to cover the cost of light and heat, rent (or mortgage interest) and rates, general household repairs, home telephone, and use of private office equipment.

Assuming you are managing the properties at home, HMRC will normally allow £2 per week without raising any enquiries. As you have claimed more than this you will need to justify the claim by reference to the actual costs and time spent working on the business at home. The following links to the HMRC website provide details of the calculation and examples:

http://www.hmrc.gov.uk/manuals/bimmanual/bim47820.htm

http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm

It is also worth noting that from 6 April 2013 the following new rates apply for use of home as office which HMRC allow you to claim based on the hours worked in the business:

25 or more hours worked per month - £10 per month

51 or more hours worked per month - £18 per month

101 or more hours worked per month - £26 per month

Also remember you may claim as a tax deduction 45p per mile for business miles travelled in connection with your rental business.

A good accountant should make these claims for you and have the information to back up the claim should there be any questions from HMRC, therefore giving the taxpayer piece of mind. And their fees are also tax deductable!

by Mark Alexander

16:28 PM, 13th August 2013, About 8 years ago

Reply to the comment left by "Neil Barlow FCCA ATT" at "13/08/2013 - 16:16":

Thanks Neil 🙂
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by james cunningham

23:37 PM, 13th August 2013, About 8 years ago

Reply to the comment left by "Mark Alexander" at "13/08/2013 - 16:28":

Hi Mark/Neil,

Thanks for the speedy reply.The letter from HMRC states that home as office are allowable expense to people who are contractually obliged to work from home by thier employer.As my claim relates to my income from property and not PAYE income they have not allowed this expense.

by Mark Alexander

8:20 AM, 14th August 2013, About 8 years ago

Reply to the comment left by "James Cunningham" at "13/08/2013 - 23:37":

This might seem obvious and a daft question but did you complete a tax return?
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by Neil Barlow FCCA ATT

9:27 AM, 14th August 2013, About 8 years ago

Reply to the comment left by "James Cunningham" at "13/08/2013 - 23:37":

Hi James,

HMRC’s position is probably based on the fact that the £4 you have claimed against rental income also happens to be the rate HMRC allow employees to claim when they are obliged to work from home. The rules are different for employees making expense claims and the self-employed making expense claims (the latter being the basis for the taxation of rental profits).

If you have spent time at home managing your rental business you may legitimately make a claim for use of home as office but you will need to be able to substantiate the time spent (which may be difficult as a letting agent is involved) and prepare the calculations as indicated on the HMRC links provided.

Refer HMRC to their manual http://www.hmrc.gov.uk/manuals/bimmanual/bim47810.htm and http://www.hmrc.gov.uk/manuals/bimmanual/bim47815.htm

by Mark Alexander

9:30 AM, 14th August 2013, About 8 years ago

Reply to the comment left by "James Cunningham" at "13/08/2013 - 23:37":

PS - Neil is my accountant, check out his member profile 🙂

This link might also prove useful to help improve your returns as a result of reducing management costs >>> http://www.property118.com/find-me-a-tenant/
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by Puzzler

16:44 PM, 14th August 2013, About 8 years ago

Reply to the comment left by "Neil Barlow FCCA ATT" at "14/08/2013 - 09:27":

Business premises within the home are allowable for the self-employed as you say. However it is calculated as a proportion of the home running costs (not a flat rate) and the same proportion must be used when you sell your home and it will be subject to CGT as not part of your PPR.

For £4 a month and one property I don't think it's worth muddying the waters.

by Neil Barlow FCCA ATT

18:34 PM, 14th August 2013, About 8 years ago

Reply to the comment left by "Puzzler " at "14/08/2013 - 16:44":

Hi Puzzler,

The HMRC links in my posts give the details of the calculation required to substantiate the use of home as office claim, and as also mentioned above from 5 April 2013 there are flat rate deductions which the self employed may use.

Also provided there is not EXCLUSIVE use of part of the home as an office there is no CGT issue to worry about.

by andrew townshend

19:11 PM, 14th August 2013, About 8 years ago

possibly your £4 a week is too much, i claim £50 a year, perhaps i should be claiming a bit more.

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