Home Office, how much can I expense?
Discussion
Setting up an office at home for a new business, using one room as an office and about 6-8 servers. It's just an online business, so I don't need to meet clients at my own site so I don't see the need for dedicated premises just yet.
As I am only renting a 2 bedroom flat and have turned the lounge into an office, can I get away with expensing a portion of the rent and the majority of the electricty bill?
Cheers,
Smele.
As I am only renting a 2 bedroom flat and have turned the lounge into an office, can I get away with expensing a portion of the rent and the majority of the electricty bill?
Cheers,
Smele.
I think the Revenue would be very curious of any expense of this nature which exceeded £1,000. However "Business Use of Residence" or "Use of Home as Office" is an accepted and allowable cost. The Revenue suggest you work it out as follows -
Add together all your domestic utility costs - light, heat, power, water charges and council tax (NOT mortgage repayments - not even mortgage interest, should be included in these addiotions). Divide the total by the number of habitable rooms in the house - excluding bathrooms, utility rooms, hallways and garage.
If you are paying rent then, in theory, a proportion of that should also be included. However, be a bit careful as if you do claim a proportion that results in a very high expense claim, you could be inviting a tax investigation.
Add together all your domestic utility costs - light, heat, power, water charges and council tax (NOT mortgage repayments - not even mortgage interest, should be included in these addiotions). Divide the total by the number of habitable rooms in the house - excluding bathrooms, utility rooms, hallways and garage.
If you are paying rent then, in theory, a proportion of that should also be included. However, be a bit careful as if you do claim a proportion that results in a very high expense claim, you could be inviting a tax investigation.
I see, that all sounds interesting. For the first year I do not intend to draw a salary from the company, I reckon that I will just re-invest any revenue that I receive or pay the directors back. But in the second year if all goes according to plan, I shall be able to draw a salary and perhaps rent a suite/small office, as I will be employing another person.
Just don't want to be out of pocket with rent and bills. Will ask the account of course, just trying to get some idea so that I can put some figures down on the business plan.
I will work on about £1000 as a rough figure.
Just don't want to be out of pocket with rent and bills. Will ask the account of course, just trying to get some idea so that I can put some figures down on the business plan.
I will work on about £1000 as a rough figure.
The situation is slightly more complicated if you are operating as a limited company compared to as a sole trader.
Use of Home as Office can still be put through, with an adjustment for the amount being posted to the Director's Current Account or Director's Loan Acount. Don't forget that companies are obliged to report reimbursed expenses paid to directors (and Higher Paid Employees)to the Revenue using the P11d Benefits in Kind return form every year.
Use of Home as Office can still be put through, with an adjustment for the amount being posted to the Director's Current Account or Director's Loan Acount. Don't forget that companies are obliged to report reimbursed expenses paid to directors (and Higher Paid Employees)to the Revenue using the P11d Benefits in Kind return form every year.
Fatboy said:
As an aside - why not just get a bunch of rackspace servers from the likes of JamieBeeston (see ad at top of page) rather than the hassle of bandwidth/power etc at home? They're only about £50 per month each...
Unfortunately I need direct physical access to the servers. The rest I am hosting off site.
smele said:
Fatboy said:
As an aside - why not just get a bunch of rackspace servers from the likes of JamieBeeston (see ad at top of page) rather than the hassle of bandwidth/power etc at home? They're only about £50 per month each...
Unfortunately I need direct physical access to the servers. The rest I am hosting off site.
I see
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