Has any one done year end accounts for a bed and breakfast establishment?
This particular B&B has three dedicated bedrooms, a lounge for guests, and a small office, which is pretty straight forward, with regard to expenses, repairs & renewals etc. which are directly associated with these rooms.
With regard to shared expenses, like the kitchen that is used about 40% for cooking the breakfasts and the rest of the time for the owners for their own meals (Food bought for the B&B is seperate). During the year this was refurbished, should the expenses be split 40:60?. Likewise, things such as phone, internet, council tax, insurance etc.
The B&B portion of the building (including a small office) is approximately 50% of the floor space of the building.
The real problem with proportioning costs of the asset itself is capital gains tax. I would talk with a tax expert on this one (but that is probably why you are here, so apologies I am not one).
Hi Bill, This is a bit of a teaser. Does the client need normal domestic kitchen or is it more industrial? Not sure if it makes a difference under the wholly and exclusive rules to be honest and I can't find much information on it. I did find the link below, which may be of interest but doesn't answer the question!
I don't think this is likely to be a cgt issue, all the more so as it is not exclusively used for the business, but it will affect capital allowances. As there is a personal use element it cannot be pooled and if the kitchen was ever ripped out and sold a balancing charge/allowance would need to be calculated.
From what I can glean from the HMRC website, is that running a B&B is a trade and therefore, normal (if there is such a word when it comes to HMRC) rules will apply regarding mixed use of expenses, and would not be dissimilar to using a room at home as an office.
Rob - the kitchen is a normal domestic kitchen. The scenario does get a bit complex, as the property is a grade II listed and part of it's appeal is the character of the building, the kitchen had a replacement slate floor and granite work tops installed during the year, which replace similar existing flooring and worktops. As you can imagine not a cheap refurb, so trying to work out the best way to apportion any add back when the SA return is computed.
