The Book-keepers Forum (BKF)
The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> A bit confused - rent vs studio costs
Post Info TOPIC: A bit confused - rent vs studio costs
T P


Member

Status: Offline
Posts: 11
Date:
A bit confused - rent vs studio costs
Permalink Closed

Hello.

I posted a while ago about studio costs in accounts, but am still a bit confused. I hope someone doesn't mind clarifying.

My b-i-law lives at home with his parents and pays £200 per month in "rent". He is self employed as an illustrator, and works in one of the rooms of the house as his studio. For tax purposes, his mum has written out a receipt in payment for studio costs of £200 per month, so he can put his rent (studio costs) through his business as an expense. Effectively paying no rent, he is classifying all rental payments through his business as a studio cost.

Is this legal? Sounds a bit sketchy to me from HMRC's point of view, but does anyone know if this is allowed or not?

Thanks,

Tom.

__________________
kjmcculloch


Guru

Status: Offline
Posts: 668
Date:
Permalink Closed

I would suggest that if it's not true then it's not legal. Plus, I'm sure this will have an impact on CGT if his parents decide to sell their house.

Kris

-- Edited by kjmcculloch on Sunday 22nd of November 2009 06:40:26 PM

__________________
Kris McCulloch 
Tel: 01563 370123

The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
T P


Member

Status: Offline
Posts: 11
Date:
Permalink Closed

Well it's true, but I think it's nevertheless worth a phonecall to HMRC to find out, in addition to the capital gains too...

Thanks Kris.

__________________
kjmcculloch


Guru

Status: Offline
Posts: 668
Date:
Permalink Closed

Just another wee quick point Tom. Bear in mind the MLR.

Kris

__________________
Kris McCulloch 
Tel: 01563 370123

The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
Amy8n


Veteran Member

Status: Offline
Posts: 58
Date:
Permalink Closed

If the studio is rented for business use then the building will need to have the correct permissions for business use. In this situation, I would assume the building to be for residential use only. In addition, he would need to pay business rates as well as rent.

I can see what your client is trying to do but I would have thought it best he just claimed an allowance on his tax return for working from home.



__________________
-------------------------
 Amy
-------------------------
T P


Member

Status: Offline
Posts: 11
Date:
Permalink Closed

Ah I see, thanks very much guys I'll forward on the message and he can get on the case.

Thanks again.

__________________
Page 1 of 1  sorted by
 
Quick Reply

Please log in to post quick replies.
The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> A bit confused - rent vs studio costs
Tweet this page Post to Digg Post to Del.icio.us
Members Login
Username 
 
Password 
    Remember Me  
©2007-2024 The Book-keepers Forum (BKF). All Rights Reserved. The Book-keepers Forum (BKF) is a trading division of Bookcert Ltd. Registered in England Company Number 05782923. 2 Laurel House, 1 Station Rd, Worle, Weston-super-Mare, North Somerset, BS22 6AR, United Kingdom. The Book-keepers Forum and BKF are trademarks of Bookcert Ltd. This forum is a discussion forum only. There will usually be more than one opinion to any question and any posting should not be viewed as a definitive solution. No responsibility for loss occasioned to any person acting or refraining from action as a result of any posting on this site is accepted by the contributors or The Book-keepers Forum. In all cases, appropriate professional advice should be sought before making a decision. We reserve the right to remove any postings which are offensive, libellous, self-promoting or engaged in covert marketing. We will not notify users of removals. The views expressed in the forum posts are those of the individual and do not necessary reflect or agree with those of The Book-keepers Forum. Any offensive or unsuitable posts will be removed by the moderators. Any reader of this forum can request for a post to be looked into by sending an email to: bookcertltd@gmail.com.

Privacy & Cookie Policy  About