This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Use of Home

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm
Use of Home

Postby CG » Sat Jan 30, 2021 2:06 pm

I have a client who works in the film industry as a costume maker. Her work is sometimes employed, sometimes self employed. In 2018-19 she was mostly self employed and used a few rooms in her house with assistants, so we made a use of home charge based on actual costs apportioned to number of rooms used.

In 2019-20 she had very little self employed work and was employed throughout the year. This current year she will also be employed on different jobs.

She has one room dedicated to her work with cutting tables etc where she spends evenings and weekends researching new techniques etc and doing her self employed work when it comes in.

I am taking the view there is minimal if any use of home charge to go in her self employed accounts for 2019-20, but she feels the room dedicated to her work and development should be taken into account. Am I right to think that would be viewed as being used for self development that's not exclusive to her self employed work or should there be an allowable charge here?

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Use of Home

Postby robbob » Sat Jan 30, 2021 2:47 pm

My random thoughts
Its very specifics dependent - you need to use fair and reasonable calculations along lines appoved/advised by hmrc - depending on actual costs refrence that property and the specifics of her circumstances claims could massively vary.

Ref your specific question if its setup for business use but not actually used a lot i don't think there is any answer to your question here - its just up to you and your client to make sure your claims are reasonable. I would say this could just as easily go either way - certainly if a room needs to be setup and ready to go at short notice when work comes along ref trade there is a reasonable argument to say that it needs to be that way to run the business and thats an onging business use.

Note the one thing never to do if you own your own home is EVER to have one room dedicated to business- thats the number one rule if you don't want to drop your client in it or for them to drop themselves in it with regard to capital gains exemption. Practicably speaking most people at some stage each year will have personal use of the business room(s) =for some personal project / friends over / used for ironinng - just be very careful to bake this fact into any calculations you do and make sure the calcs match reality!
https://www.ftadviser.com/investments/2020/08/12/advisers-warned-of-tax-implications-of-working-from-home/


Return to “Income Tax”