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Where Taxpayers and Advisers Meet

House renovation

Joined:Tue Aug 17, 2021 2:21 pm
House renovation

Postby qaz » Tue Aug 17, 2021 2:38 pm

Hi. I’m after some informal tax advice and hope someone here might be able to help.

I'm currently working self-employed doing home maintenance / small building works. My books are kept very basic, income minus materials, generally a net income of around 12k per year.

However, my wife and I have bought a second property to renovate. The mortgage is against our current property, in both our names, but the renovation property is in my sole name. I intend to cease working for other people altogether while I focus solely on getting this renovation in a condition to let or sell, probably about 6 months.

I had assumed I would just fill out my next tax return reflecting this period of no income and no expenses, but it’s just occurred to me that on my return there’s a section to declare income on rental property, so presumably this means my business will have to pay tax on rental income from this property in the future?

So my question is should I be declaring the cost of renovation materials (and my (and 3rd party labour?)) as an allowable expense?

My general attitude to my business tax is that I’d rather keep it simple even if that means I’m paying slightly more than I theoretically could be. For example I’ve never claimed any capital allowance for my vehicle or tools etc.

Is there any advantage in incorporate this renovation into my business, and how would I go about that? Or are my maintenance business and this second property two separate things?

Sorry if this sound like a silly or naive question. Any advice would be very welcome.

Joined:Sat Feb 01, 2014 3:26 pm

Re: House renovation

Postby bd6759 » Wed Aug 18, 2021 8:46 am

You cannot trade with yourself, so you cannot charge yourself for your time renovating your property.

This venture could be part of your existing business, but that depends on your intentions: will you sell or keep?

You really should speak with an accountant to ensure you get this right.

Joined:Tue Aug 17, 2021 2:21 pm

Re: House renovation

Postby qaz » Sat Aug 21, 2021 6:55 am

Thanks for the reply.
Still not sure what we plan to do with it once it's finished, probably let it for at least a few years, depends on market.
I'll carry on collecting my receipts and keeping my books and get an accountant to advice at a latter date.

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