Q. I am self-employed and have started working from home. Can I claim tax relief on any of my household expenditure?
MB Glasgow
A The HM Revenue & Customs (HMRC) policy in respect of a tax deduction for household expenses for the self-employed using their home to carry on all or part of their business is fairly reasonable.
The fundamental point to bear in mi
nd is that the part of the home used for business purposes must not be used for non-business purpose at the same time. Therefore, provided part of the house is used exclusively for business for some part of the day, you may be able to claim a proportion of the running costs.
As long as the business use is significant, you may be able to claim a proportion of costs such as telephone, broadband and heat and light. Business use of telephones can be estimated from a sample period of monitoring outgoing calls and this proportion can also be used to claim part of the line rental costs. Broadband expenditure can be calculated in the same way. Heat, light and power would take account of the requirements of the particular trade and the number of rooms used together with the time they were used for business.
Costs which have to be incurred whether or not a business is operated (such as mortgage interest, insurance and council tax) can be apportioned on the basis of the area and time of business use.
An important point to bear in mind is that if you use a room exclusively for business purposes, it could affect the exemption from capital gains tax when you come to sell your house. Minor residential use of a business room may not be sufficient to ensure the relief applies in full. You should seek detailed advice from a professional adviser on this point and in respect of your claim for expenses in general.
If you have a question you need answered, write to Jeff Salway, Personal Finance Editor, The Scotsman, 108 Holyrood Road, Edinburgh EH8 8AS or e-mail:
jsalway@scotsman.com. These answers are for guidance only. No responsibility for loss occasioned by any person acting, or refraining from acting, as a result of these answers can be accepted by Grant Thornton or The Scotsman Publications Ltd
The full article contains 388 words and appears in The Scotsman newspaper.
