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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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There, income and expenses calculations, how

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Hi there,
for rental income and expenses calculations, how much can I reasonably claim as an expense for minor use of home as office. I only have one property which I rent out and spend a small percentage of time managing. Can I treat telephone and broadband costs separately from say a standard use of home as office rate of £4 per week or would HMRC consider them to be included?
many thanks for your assistance

Can you tell me exactly what you have done over 8 years as far as managing your property accounts is concerned given that you have never declared the income and there is only one let property. Have you ever had an agent manage the letting? How long does this administrative work take per week?
Customer: replied 2 years ago.

I'm in touch with HMRC about this. I have bank statements and receipts for some but not all expenses pre-2010 but an agent managed the property thereafter. I calculate I made a net loss up until year ending 5th April 2012. The administrative work including responding to agent queries regarding maintenance etc probably takes up a few hours a month. Before the agent took over in 2010 it took up a bit more time as I had to go and sort things out and spend much more time dealing with repairers etc. I maybe averaged 4-5 hours of my time per month averaged over the year.


Leave this with me while I draft my answer.
Customer: replied 2 years ago.

I have also had to travel to the property which is in Sheffield (I live in Norwich) so I have estimated up to three journeys a year for mileage before the agent took over management. So I guess the time spent actively managing the property by physically going there versus the time sat at home on the phone to agents (hence use of home as office) has to be kept distinct? Sorry for follow-up question but I hope it helps clarify the issue

Hi again.

Given that you are dealing with earlier years and none of this has been disclosed even if you never made a profit, HMRC will look at any claims for expenses they consider spurious.

Use of home as office is really only used by the self-employed and employees on occasion. I have clients with rental profits and I never claim use of home as office. You certainly cannot claim an hourly rate for your time.

Take a look here for information on the regular types of letting expenses that can be claimed. You should then read through the notes for the self-employed claim for use of hoem as office from BIM47800 to BIM47825 starting here and the notes specific to property income here.

You can claim for travel costs where they are incurred wholly and exclusively for the purposes of the rental business. Unless you can break down your phone bills between calls specific to the letting and any others, then you will have a problem if HMRC query such a claim. As I said above, I would never claim for use of home as office unless property management is all that the client does but you could try putting through a claim for, say, £2 per week for use of home as office.

I hope this helps but let me know if you have any further questions.
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