'work from home' v 'running a biz from home'

[GetCarter]

Hi clever people.

Can you differentiate for me? If such is possible.

I work from home as self employed (composer), but never earn any money from my home, whereas my neighbour rents his house out as Air B&B.

I assume I am not running a biz from home, but he is?

(I'm in Scotland, BTW, though I don't think that makes a difference).

TIA

Edited by GetCarter on Tuesday 16th April 15:15

[dontlookdown]

Working from home is what you do on Fridays when you are employed by someone else and your primary work location is their office, but you can spend a day or two a week on the sofa prodding ineffectively at your laptop occassionally;)

You run a business from home - like me, I might add, and many other self-employed people. It's your premises as well as your home.

[And then she]

You: https://www.gov.uk/government/publications/self-as...

Him: https://www.gov.uk/government/publications/self-as...

[silentbrown]

What's the context - As in, who's asking and why?

Ltd Company, sole trader, or something else?

I just say I work from home and have a home office. The business is really run from the internet

[GetCarter]

dontlookdown said:

Working from home is what you do on Fridays when you are employed by someone else and your primary work location is their office, but you can spend a day or two a week on the sofa prodding ineffectively at your laptop occassionally;)

You run a business from home - like me, I might add, and many other self-employed people. It's your premises as well as your home.

So if I rent my recording studio out for £1k a day, I'm working from home, but if I never make any money from my studio, I'm still the same as regards tax/legal/insurance?

[anonymous-user]

silentbrown said:

What's the context - As in, who's asking and why?

I'll hazard a guess!

The OP wants to dob his neighbour in, as he doesnt like what he's doing, but wants to make sure he doesnt get done in the same way

[silentbrown]

GetCarter said:

I work from home as self employed (composer), but never earn any money from my home, whereas my neighbour rents his house out as Air B&B.

If it's just his own home, then he's probably not "running a business" at all. (England and Wales, sorry) https://www.gov.uk/renting-out-a-property/paying-t...

[Marcellus]

Coming at this from the angle not of "dobbing your neighbour in" but thinking about the differences in accounting/taxes between the two and how it could benefit you;

Doesn't it depend how your run your business?

For example as a composer are you set up as a some sort of company, sole trader etc etc?

Therefore in the course of your business do you need somewhere to work to pen your masterpieces?

If you didn't have space at home would you have to rent a studio?

Therefore, you could effectively rent your company the studio (there are guidelines on this as to how much).

How your neighbour covers his sideline with HMRC is down to him!

(btw I am not an accountant just a bloke on the interweb)

[GetCarter]

silentbrown said:

What's the context - As in, who's asking and why?

Ltd Company, sole trader, or something else?

I just say I work from home and have a home office. The business is really run from the internet

I'm asking as I work from home but never make any money FROM my home. I write.

If my neighbour repairs cars in his garage for money, is he in the same situation as me, tax, legal, insurance etc.? TIA

BTW, no intention of 'Dobbing' anyone in!

[anonymous-user]

You’re a composer, that’s your job. Where you compose is your place of work.

[GetCarter]

garyhun said:

You’re a composer, that’s your job. Where you compose is your place of work.

Okay... so I am in the same situation as the local hotel.

(I'm not arguing, just genuinely don't know the difference (if there is one) between working from home and renting out your home/services AT your home).

If there is none, then thanks for the info

[jeremyc]

If your primary place of work is your home, then you are running a business from your home.

If there is somewhere else you go to work for a majority of your time, then when you are at home you are working from home.

My accountant always recommends that I expense a proportion of the home running costs to the business in return for providing an office to run the business from.

[And then she]

jeremyc said:

My accountant always recommends that I expense a proportion of the home running costs to the business in return for providing an office to run the business from.

This is fine advice unless you're planning to sell your home at a significant profit: https://www.gov.uk/tax-sell-home

[GetCarter]

Thanks for the help folks.

[anonymous-user]

And then she said:

jeremyc said:

My accountant always recommends that I expense a proportion of the home running costs to the business in return for providing an office to run the business from.

This is fine advice unless you're planning to sell your home at a significant profit: https://www.gov.uk/tax-sell-home

Exactly. I looked into this a few years back and decided not to expense any part of my home in case of future issues when selling.

[Marcellus]

And then she said:

jeremyc said:

My accountant always recommends that I expense a proportion of the home running costs to the business in return for providing an office to run the business from.

This is fine advice unless you're planning to sell your home at a significant profit: https://www.gov.uk/tax-sell-home

As I understand it that's only an issue if the area you had used can only be used for the purposes of the business, obviously that is highly unlikely as for most people it would double up as a spare room when required!

[silentbrown]

GetCarter said:

I'm asking as I work from home but never make any money FROM my home. I write.

You're not generating income directly from your property, as a landlord (like your neighbour), but you're certainly using your home as base for your business, so you're certainly making money "from home".

If it's to do with planning/rates/property sales, then I'd get some professional advice, (unless your "studio" is little more than a converted bedroom with a handful of midi gear.) Particularly if you've put costs for constructing/modifying/fitting-out your studio through the business books.

[anonymous-user]

Marcellus said:

And then she said:

jeremyc said:

My accountant always recommends that I expense a proportion of the home running costs to the business in return for providing an office to run the business from.

This is fine advice unless you're planning to sell your home at a significant profit: https://www.gov.uk/tax-sell-home

As I understand it that's only an issue if the area you had used can only be used for the purposes of the business, obviously that is highly unlikely as for most people it would double up as a spare room when required!

But if you expense the room (proportion of heating and lighting for example) it can be an issue.

[silentbrown]

garyhun said:

But if you expense the room (proportion of heating and lighting for example) it can be an issue.

Claiming expenses for it is largely unrelated to any CGT liability. http://www.lewissmith.com/cgt-problems-working-hom...

[anonymous-user]

https://www.mygov.scot/business-rates-guidance/wor...

Unlikely to be an issue if you don't rent out the space or have visitors, but worth double checking with a local assessor for peace of mind.