Claiming rent for working from home - risk of capital gains?
Discussion
Evening All
My accounts are due and every year my accountant declares £900 as rent as I work for some of the time from home. I do not want the Gov to claim Capital Gains tax against my house. Not sure it is worth claiming £900 in accounts. My accountant said should not affect me.
Made a tiny profit last year.
Wondered if anyone can give me their thoughts on this please?
Thanks
24/7
My accounts are due and every year my accountant declares £900 as rent as I work for some of the time from home. I do not want the Gov to claim Capital Gains tax against my house. Not sure it is worth claiming £900 in accounts. My accountant said should not affect me.
Made a tiny profit last year.
Wondered if anyone can give me their thoughts on this please?
Thanks
24/7
No CGT risk as far as im aware as you should not include mortgage capital payments....ive been working from home office for 15 years, here is my understanding and what I use for self assessment each year:
For casual home office use then you can use the simple method and claim a small amount per week (your accountant is not doing this for you)
or you work out the costs and claim that as an expense. See here for the example of the maths (which it sounds like your accountant is doing for you)
https://www.rossmartin.co.uk/self-employed/what-ex...
basically in your case you are offsetting an expense of £900 of the running costs of a room in your house.
For casual home office use then you can use the simple method and claim a small amount per week (your accountant is not doing this for you)
or you work out the costs and claim that as an expense. See here for the example of the maths (which it sounds like your accountant is doing for you)
https://www.rossmartin.co.uk/self-employed/what-ex...
basically in your case you are offsetting an expense of £900 of the running costs of a room in your house.
No risk in 99.999% of circumstances.
The claim is purely a business offset and is to cover costs that are incurred by the business. There is no element of profit, supposedly, in this figure so HMRC would not try to levy any income tax on the home owner for "rental income". Following on from that, they would not seek Capital Gains Tax if and when the property is disposed of.
If, on the other hand, the "Use of Home" charge is set at a high level i.e. more like commercial rent, then the homeowner would have to pay income tax on the rental profit and would be required to calculate a capital gain when the property was eventually disposed of.
The claim is purely a business offset and is to cover costs that are incurred by the business. There is no element of profit, supposedly, in this figure so HMRC would not try to levy any income tax on the home owner for "rental income". Following on from that, they would not seek Capital Gains Tax if and when the property is disposed of.
If, on the other hand, the "Use of Home" charge is set at a high level i.e. more like commercial rent, then the homeowner would have to pay income tax on the rental profit and would be required to calculate a capital gain when the property was eventually disposed of.
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