Showing posts with label work at home. Show all posts
Showing posts with label work at home. Show all posts

Friday, May 16, 2014

Use of home deduction when using a Ltd

While sole traders and partners can claim an amount for using their own homes for business use, companies cannot as they do not have ‘homes’ so if a Director works from home and wants to make a claim for the cost incurred it is necessary for the Company to rent the proportion of the property that the Director uses. To ensure that the Company is able to get a corporation tax deduction for the rent it is best practice to have a rental agreement in place between the Director and the Company.

The rent charged should be worked out as being a proportion of the expenses incurred time apportioned to the time that property is available. Expenses that can be claimed include council tax, mortgage interest, heating and lighting costs, water, insurance, broadband connection, maintenance and repair, (this is not an exhaustive list) HMRC business manual BIM47820 deals with allowable expenses and suggested methods of apportionment are dealt with in BIM47815 with some examples at BIM47825.

Monday, November 12, 2012

What is the settlements legislation?

Sharing dividend income from a limited company with a non-fee-earner has been a classic tax avoidance tactic employed by consultants, contractors and locum doctors who operate through limited companies. It is useful as it allows the use a non-fee-earner’s tax allowances and progressive taxation rates in order to save significant tax.

However, unless the non-fee-earner is a spouse or civil partner qualifying for a spousal exemption, HMRC could treat all the company’s fee income as that earned by the contractor, and tax them accordingly. The settlements legislation will apply if a contractor gives shares in their contractor limited company to a partner, family member or friend who does not work in the business yet receives an income.

Thursday, December 16, 2010

What tax relief for use of home?

This is a common question and unfortunately, it's a bit more complex than most people think.

Depending on your legal setup, the steps to take to recover some of your personal expenses on use of home are different. For a sole trader, the process is quite straightforward but for a limited company there is a bit more work and paperwork required:

You are a sole trader

You can just deduct a portion of the home cost. The calculation is done as a two step process. First you calculate the total running cost of your home:
  • Utilities (Water, Gas, Electricity)
  • Insurance
  • Rent or Mortgage Interest
  • Council Tax
  • Maintenance
  • Internet and Phone