I need to do a Corporation Tax Return for a Ltd Company-just one director who sometimes works from home. Is there a section in the Corporation Tax Return to include this as I cant post it on Sage during the year because it is debited to her personal bank account and I reconcile the business bank account monthly
It looks like Ben & I crossed posted at the same time!
I don't understand your question. The CT return only has final figures, as any adjustments are done by suppling seperate Tax computations with the accounts which are submitted with the CT return.
I don't understand why the Use of Home Allowance is debited to the directors personal bank account (credited perhaps after being paid from the companhy?) - is this the £3pw home use allowance? This would normally just get posted against the director loan account. This can either be set up as a bank account on sage, or on the nominal ledger, which then means you pass a journal to account for the expense in the accounts.
-- Edited by YLB-HO on Wednesday 16th of May 2012 08:44:53 AM
What I do for Use of Home Allowance for Directors is to set-up another bank in Sage and call it 'Directors Loan Account' and also use the Directors Name. You can then make a payment using the new Directors Loan Bank and Dr the relevant Sage code that you are using for Use of Home. If the Director has repaid the Use of Home amount you can reflect this in sage too, if not then it stays in the accounts as money owed to the director in the future.
This will then put the expense into Sage for the year end and you will not need to amend the CT Return.
That's great - I have a directors current account set up already that was used for initial set up costs and I am slowly paying that back so I can add to that. I have a dispensation aswell so hopefully that makes it all legal and above board!
Thanks for getting back to me and sorry for confusing you! Yes of course I meant the tax computations!
But Ben's idea of using a directors account on sage to post the payments for gas,electric,water etc as they are paid seems great. Then when the business pays them back they can be Dr to directors bank ac CR business bank ac. The dispensation I hope should cover this and then I wont need to adjust the tax computation??
Oh I almost forgot, my client wants to claim more than the £3 per week so I have to annualise the allowable bills( water,electric,gas and phone) and then take how much of a % as business usage???
It is up to the client to justify whatever % they want to use. But if the are ever inspected they would need to be able to justify it.
Easiest way would be if they use a room in the home exclusively for the business eg office. Then take the size of that room as a % of the size of the other rooms excluding kitchen and toilets and that would be a reasonable % to apply.
I am now a tad further confused in that on the HMRC website there is a section that says self employed/directors/employees can claim a % of council tax and mortgage payments as use of home allowable expenses but another section that says they cant! (only water,gas,electricty and phones)- this could make a big financial difference to my client so any ideas?
My understanding is that you can claim the % percentage of all the council tax but only the relevant % of the interest on the mortgage payments. You cant claim any of the capital element
Think you are getting confused with what directors/employees can claim and self employed can claim
If you are employed then you would only be able to claim the costs over and above what you would incur anyway. So that would be things like business telephone, business related gas/electricity etc. You couldnt claim council tax and mortgage costs as these are a personal cost and as the guidance says you would incur this anyway.
If you are self employed then you are choosing to work from home rather than business premises and thus are avoiding a rental cost. The use of home in this case is to calculate this notional rental cost and thus would include all business utility costs and a relevant proportion of council tax and interest on mortgage payments.
