Interesting discussion on another forum about expenses which can be claimed when running your business from home.
An accountant (as far as I know) on this forum suggested that 100% of boradband costs could be claimed as, in their words "You can't run your business without it".
Personally, I think this is wrong, and it should be apportioned like other household costs, what are the views?
Well since downloading music and films is illegal and bookkeepers/accountants would never ever use naughty sites, i can see only one possible use for the internet and thats work lol, how boring.
Expenditure on an internet connection (including broadband and wireless broadband) is allowable to the extent that the connection is used for business purposes. Where there is 'mixed' (business/non-business) use, follow the approach used for telephone rentals.
This has got me confused now. I use my broadband mostly for business purposes. I was led to believe that because I use it for personal purposes as well I couldn't claim ANY of it. I have to pay the monthly fee regardless of any business use. Similarly with my BT landline. I only use it really use it to connect to the internet and receive phone calls telling me my computer is infected or asking if I want a new kitchen. Any calls I make out are done on my mobile. So I have to pay a quarterly fee to BT anyway regardless of how much I use it for business.
Reading these posts and that link means a re-think.
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I'm as confused as you are about this. I thought that the 'business use' should cause a change in the expense for such an expense to be claimed (e.g. if you work from home then you are allegedly consuming more electricity, so a portion of the electricity bill can be claimed - what proportion depends on the amount of business use). But if you pay a monthly fee for your mobile phone and use it to also make a few business calls then you could not claim a portion of that monthly fee because you would pay it anyway.
However I know that if you work from home you can claim a portion of your mortgage interest which flies in the face of the principle mentioned above. Hence the confusion... :o)
Really curious to know more about this. ;o)
Fabs
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Hi Fabs - I don't have a problem with the "use of home" to cover a proportion of the electricity. gas, water, council tax, interest on mortgage etc - it is just the line rental of a phone and the monthly broadband fee both of which are required regardless of business use.
So, like you, I am curious to know more about this.
May have to wait until Monday - some folk don't worry about these things over the weekend.
EDIT : For use of home I just use a "reasonable" figure of £3 per week 48 weeks a year.
-- Edited by Peasie on Sunday 13th of November 2011 02:32:28 PM
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Never buy black socks from a normal shop. They shaft you every time.
EDIT : For use of home I just use a "reasonable" figure of £3 per week 48 weeks a year.
Hi Peasie
My understanding of the above "allowance", is for those businesses that only do a bit of admin work at home eg a plumber who might knock out a few invoices a week, and pay a few suppliers but does not spend hours working at it (from my experience, you are lucky if they spend five minutes doing admin).
If, like most self employed bookkeepers, you are using a room at home for several hours a day for the majority of the week, then I would use an apportionment method on all house expenses except those specifically dissallowed (mortgage payments etc), otherwise electricity, heating telephone, broadband etc are fair claims. Like using a private car, it is possible to work out reasonable private: business split.
The problem arises when it is not possible to seperate a personal expense from a business one, for example a holiday abroad combined with a business meeting. Which part of the flight is the business part? In this case there is a genuine "duality" issue.
I have seen some accountants take an arbitory percentage of domestic expenses but have read inHMRC BIM manual (no idea which one) that inspectors should establish the reasoning behind the percentage used. So basically if you can show workings/ caculations for your use of home, then it should be OK
HTH
Bill
Edit Additional Info. Using a room for a few hours everyday for business, does include any business work, which could also include research (forum contributions ) designing your business website etc. It is not restricted to doing the actual bookkeeping part.
-- Edited by Wella on Monday 14th of November 2011 09:22:51 AM
Yes, that article explains it clearly. So we do agree that a portion of the expenses for the house can be claimed even if their amount is not directly affected by the use of home for business, such as council tax and mortgage interest... That was my understanding, but I was just looking for confirmation. :o)
Fabs
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Broadband can be claimed as a business expense (100%), or an employee or a director may be reimbursed for the costs, providing the personal use is "Incidental" to the business use. If the personal use is more than "Incidental" if you are self-employed it is aportioned, and if you are an employee or director it is not allowable for business use!
It was the basis we used in the case of a business owner working from home on a hosted system. Namely that the broadband was essential for use of the hosted system with any personal use falling into the incidental category.
) designing your business website etc. It is not restricted to doing the actual bookkeeping part.
