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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15709
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My house has 4 bedrooms, 3 reception rooms, 1 kitchen, 1 downstairs

Customer Question

My house has 4 bedrooms, 3 reception rooms, 1 kitchen, 1 downstairs shower room, 1 ensuite bathroom and a bathroom that has no bathroom suite or plumbing in it. I use the dining room for my business selling on Amazon. I have full time use of it, except at christmas and when the kids practise piano in there. My mortgage interest was £3574.39, council tax was £2265 and electrity/gas was £1591.96 for the whole house during tax year 2014/15. What is a reasonable way to calculate my home office allowance and what £ value is acceptable to the HMRC?
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.
Hi. You should read the notes starting here and then look at the examples here. Some taxpayers divide the costs between the number of rooms in the house (some exclude the kitchen and bathroom) and then take a percentage of the result based on the number of house worked daily out of 24. Others use the square footage method to arrive at the costs for the particular room and then apply the number of hours worked daily out of 24. You cannot just pluck a figure out of the air as HMRC may ask you to show how you arrived at your claim. Take a look here for information on a simplified expense claim system. I hope this helps but let me know if you have any further questions.
Customer: replied 10 months ago.
I've read all the guidance. is it acceptable to exclude kitchen and bathrooms?
Expert:  TonyTax replied 10 months ago.
I have seen many claims done that way and there is mention on the HMRC site somewhere that the bathroom can be discounted as a room. You don't have to send your workings to HMRC unless they ask to see them.
Customer: replied 10 months ago.
Is this on top of what I seem to have paid already?
Expert:  TonyTax replied 10 months ago.
You only pay one deposit. Even after you have accepted an answer, you can ask follow up questions on the same topic.
Customer: replied 10 months ago.
I'm still a bit confused, I seemed to have paid £42 for an indepth answer, but have to pay a further £38 for a telephone call. Is that correct?
Expert:  TonyTax replied 10 months ago.
You don't have to have a phone call. It's just an extra service available to anybody who wants it.
Customer: replied 10 months ago.
Ok now I've got it. Still woul like some sort of opinion on my question though.
Expert:  TonyTax replied 10 months ago.
HMRC can challenge any claim. I've been in tax for 36 years and nothing surprises me any longer.
The examples give you a good guide as to what you can do. They are from the HMRC website so its hard to argue with them. If I was making a claim I'd exclude the kitchen and bathroom as I've seen many such claims not challenged.
People go wrong by making ludicrous claims as to how many hours a day they work and HMRC can see right through them.
Customer: replied 10 months ago.
So although it is set up as my workspace all the time and full of stock, I can only claim for the hours I'm working in it?
Expert:  TonyTax replied 10 months ago.
If you had a room which was never used for anything but business, eg as storage, then maybe a larger claim would be possible. HMRC would ask you why you are heating a room when there is nobody in there if you made a 24 hours a day claim.
Customer: replied 10 months ago.
So a percentage of 80% of the proportional costs is not advisable?
Expert:  TonyTax replied 10 months ago.
How did you arrive at 80%?
Customer: replied 10 months ago.
Although fixed costs, mortgage interest and council tax continue to be payable, don't they?
Expert:  TonyTax replied 10 months ago.
Can you tell me how you got to 80% please.
Customer: replied 10 months ago.
Seem a fair divide
Expert:  TonyTax replied 10 months ago.
If you tell me how you arrived at your figures and on what basis you arrived at them, I'll tell you what I think.

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