If you are self-employed and use part of your home for business, you can offset utility expenses and mortgage interest against your income, but beware of Capital Gains Tax implications!! Say you use one of your 6 rooms in the house solely for business and claim one sixth of all your utility bills and mortgage interest as an allowable expenses, when you come to sell your house, one sixth of any gain you make on the sale of the house could be subject to capital gains tax at 18%. There are allowances that could reduce the amount of any capital gains tax to pay depending on your circumstances.
A less complicated, and possibly more common scenario, is that you use part of your house for business, part of the time. In this case, you will not suffer Capital Gains Tax on the sale of your house, as you have not claimed an area of the house as exclusively used for business. HMRC have given us some examples of how to calculate how much of your utility bills and mortgage interest (not capital) that can be offset against income at http://www.hmrc.gov.uk/manuals/bimmanual/BIM47825.htm. These calculations are based on the amount of the house used for business, and the amount of time the room is used for business.
You can also claim expenses for working from home if you are employed, but there are many rules surrounding this, such as you having no other option but to work from home, for example if your employer is in Germany and there is no UK office, etc,.
For any further guidance specific to your circumstances and friendly accounting and taxation services, please email me at amy@tayloraccountancy.net. I am based in Potton, Sandy, Bedfordshire, but also deal with clients across the UK remotely.
Amy Taylor Accountancy takes every care in preparing material to ensure that the content is accurate and up to date. However no responsibility for loss to any person acting or refraining from acting as a result of this material can be accepted by Amy Taylor Accountancy
Tags: expenses self-employed working from home capital gains tax
