sole proprietor claiming office costs

[Bann1]

Is capital gains tax chargeable on the sale of my home if I claim a portion of council tax as part of my home office costs, working as a sole trader?

[accountant@uktaxshop]

In theory using an element of your home exclusively for business will make that element liable to CGT, although not your whole house.

I.e. if you use one room out of 8 for business, 1/8th of the total gain times the time spent in business divided by the total time you have occupied your house would be liable. This would be subject to taper relief (max 40% after 10 years) and your personal allowance of £7900. Therefore any gain is likely to be small.

However, if the rooms are shared with normal domestic usage there should be no liability. I.e. get that sofa bed in your office, put up some curtains and claim it as a spare bedroom. The same thing applies to business rates.

Actually claiming the council tax portion shouldnÂ’t make you liable for CGT, if you are paying business rates on the room you may well be.

Mark the "Tax Doctor" also covers this area in question one of his series, linked to your right.

If you need some help filling in your tax form to make sure you are claiming all the potential items, please let me know.

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436

[One Eyed Jack]

Whilst agreeing with Mr Smith's strategy of being able to demonstrate that business use is only 99% to get around the problem, there is always roll over relief to fall back on.