I hope someone can help me clarify this. I have two questions, but they both relate to the same topic: allowances that a business can claim.
One of my clients is a sole trader and works from home part-time. He works a few hours per day on a desk from his bedroom, so I believe there is no capital gain tax implication, but please correct me if I'm wrong). I know that he can claim an allowance for use of the home for business purposes; he does IT work from his laptop and we established that £5 per week is appropriate for his circumstances as it covers a reasonable portion of electricity bills and broadband bills.
My question is who should account for this allowance? Should I (the bookkeeper) enter this into the books as an overhead of the business or should I leave it to the accountant to work out along with all the other allowances when the self assessment tax return is prepared at the end of the year?
Same question about a buy to let business. If the property is let furnished I believe the owner can claim 10% of rent as allowance for wear and tear. Should I include this in the books as an expense every month or should I leave it to the accountant to work out?
Personally I am keen to enter as much details as I can in the books as I know that my client likes to use my statements to monitor his profitability, but I wouldn't want to do something that is not allowed (I'm not aware of anything that prohibits that, though).
Any guidance would be really appreciated.
Thank you.
Fabs
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Boomerang Bookkeeping
Fixed-fee Bookkeeping Solutions for Small Businesses from £15 per month.
I assume from the post that your IT client has an accountant. When you say we have established £5, is that you and the client, or did you ask the accountant for some input? Personally in this instance I'd give the accountant their place. They will also be able to indicate whether they wish to add it at the end of the year, or want you to account for it.
Again for the second, if they have an accountant, speak to them. The key to a good service for the client is joined up thinking from the bookkeeper and accountant. Don't be scared to call or email them.
Regarding the home as an office, you might find this useful: http://www.kmbookkeeping.co.uk/guide-home-office.php
There's nothing that prohibits you from posting the "use of home" as part of the bookkeeping. But as Kris says, if there's an accountant, it would be nice if you were all in agreement over the amount.
There may be reasons (tax or otherwise) why the client might want to claim more or less for "use of home" depending on the client's circumstances.
Ditto the buy-to-let/furnished property. Your client has a choice of 10% wear and tear or use the renewals basis. One or other might be more advantageous to your client.
This isn't a question of "deferring the the accountant", in either case, by the way - just two professionals agreeing over which methods/calculation would be in the client's best interests. As the bookkeeper, you have the advantage of seeing the client's records more regularly and so are potentially in the position of having a better insight to the client's day-to-day affairs than the accountant, and this can be used to the client's advantage.
A bit off your topic, but as you had no introduction post I had to put this somewhere. A boring Sunday has had me clicking on links here, there and everywhere. One of these was for your website. I'm very impressed by it. I think the simplicity is fantastic and the services you offer are really appealing. The only comment I would make is ditch the 0845. I used this for about 6 months and when I dropped it in favour of a geographical number calls almost doubled. Recent Ofcom research suggests that an 0845 number is likely to put off 76% of potential customers.
Recent Ofcom research suggests that an 0845 number is likely to put off 76% of potential customers.
Might have been good idea at one point but they are one of the very few calls I actually pay for on my mobile phone. 0800 number I phone using the landline (for free) as I'm charged for phoning them when on a mobile.
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Never buy black socks from a normal shop. They shaft you every time.
thanks for the feedback. I was not aware of that Ofcom research... 76% is quite a big chunk of people. I'm using an 0845 number because I was suggested to do so as it was supposed to give me a national presence and look more professional. I'll try to switch to the geographical number and see if and how the number of calls changes. I does not cost me anything so it's worth a try. ;o)
Fabs
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Boomerang Bookkeeping
Fixed-fee Bookkeeping Solutions for Small Businesses from £15 per month.
I did the same when I started out. I then found voipfone who offered geographical numbers for a couple of pounds a month. The great thing about these is if you are doing a marketing campaign in a specific area you can buy a number local to that area, or link numbers to specific marketing medium to identify who saw your ad where.
I think Peasie hit the nail on the head. People don't get these included in call packages and they can cost a small fortune. They were a good idea when we had local and national rate numbers, but with that now gone there is little point in having one.
After posting Kris, I had a re-think and thought if he was going for a national image these might be a good idea rather than a local number. Just noticed I have the same birthday as him.
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Never buy black socks from a normal shop. They shaft you every time.
I see your thinking Peasie, but the new 'national' numbers appear to be 0330 numbers which are included in call packages and cost the same as 01 and 02 numbers from landlines. Which makes a difference if you think that calling an 0845 from an 02 mobile will set you back 25p per minute. Another way is to offer an alternative geographic number under the 0845 and give people a choice.
Like I say, it was the only thing I noticed on a website I thought was great.
