Re: Use of home as office - allowable expense?

Alan Ferris wrote:

Indeed look at it and note that currently the OP stated that no room
has been set aside exclusively for business.

But you don't need to set aside a whole room full-time. A whole room
is just a fraction of the whole house, but so is a fraction of a room,
and it still is even if it's part-time.

If you run your business empire from your bedroom, you can't claim
business use of the whole bedroom full-time, because you also sleep
in it, and sleeping is not a business activity [notwithstanding that
some people do sleep while at work].

You probably can't even claim the whole bedroom part-time, because the
presence of the bed, wardrobe, etc, would amount to personal use of
some of that room. The best you could do is declare a reduced area of
the room (that area which excludes personal furniture) as your business
space, and then you could say that *that* space *is* used W&E for business.

Therefore he will not be able to claim any of the rent as their is no
additional cost. Only additional costs are allowed.

Where does the law say anything about costs having to be additional?
There is no such requirement, the sole requirement is that the cost be
incurred W&E. Therefore, for instance, if you were to account for
business use of a car and did not use the mileage rates but the
business proportion of actual costs, whilst there are some actual costs
which increase as a result of adding business use (such as fuel, wear
and tear, frequency of services, perhaps insurance), there are others
which do not (licence, MOT, cleaning, loan interest), and yet the costs
in the latter category can also be apportioned according to proportion of
business use the car receives (as measured by miles driven).

The cost of anything can be typically be split into three parts:
(a) that part which is exclusively private,
(b) that which is exclusively for business,
(c) that which is mixed-use and so does not fit into either (a) or (b).

Simplistically one could say that a car used both privately and for
business is already mixed-use and you couldn't therefore claim any
of its cost against the business. Luckily, however, the W&E rules
are interpreted more generously, and provide that where there is an
identifiable portion of car use which is exclusively for business,
then that portion of the whole cost can be attributed to the business.

In the case of telephone calls, the only thing in (a) is the cost of
outgoing business calls, and they do happen to be additional, but it's
not their additionalness which makes them allowable, it's the fact
that they're identifiable as having a business-only purpose.

The cost of outgoing personal calls would be in (c), and line rental
is in (b). The reason a portion of line rental cannot be claimed is
because it is not obvious how to split it into business and private
elements. To do so on the basis of the ratio of business to private
outgoing call costs is not obviously correct, unlike in the case of a
car where the fixed costs can be split on a mileage ratio.

Why? Because the sole purpose of a car is to be driven, and to be
available to be driven. But the purpose of having a phone is not
exclusively to make outgoing calls, it is also to be available to
receive incoming calls. This is an inherently mixed-use purpose.
You never know what the purpose of the next incoming call is going
to be until it comes (and it might be neither - wrong number).

I expect if you had an incoming-calls-barred line, then you could
indeed apportion its line rental by the ratio of business to private
outgoing calls, but I can't off hand think of any reason why you
would want to have such a thing.

.

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