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As Sole Trader or Limited you can claim a partial rate of your rent if the house where you live is used for business purpose. As usual everything has to be reasonable and calculated pro rata on time spent and space used (domestic use vs business use).

This is indeed true for rent. What happen if the Sole trader, or the Director of the company wants to buy an house instead of renting.

What kind of financial benefit can he/she use? Can it still claim back a percentage of a virtual rent? Is there any specific split of a possible mortgage between the personal part and the business part?

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If the UK is similar to Australia then you would not claim a virtual rent for the business portion but instead could claim a portion of the house expenses such as electricity use, property taxes, and yes a portion of the mortgage, and any repairs or renovations done to the work areas of the house.

However, you should keep in mind that if you sell the place you may have to pay CGT on the portion you were claiming for business use.

  • what in case of the sum payed in advance (let's say you pay 40% upfront and 60% via mortgage) – Snick Dec 18 '14 at 23:39
  • @Snick - say you come up with the business usage of the house to be 10% - then you should be able to claim 10% of the interest payments of the mortgage. You also may be able to claim 10% of the depreciation on the property. The purchase price itself just counts as the main part of the base costs when working out any capital gains when you sell the property. – Victor Dec 18 '14 at 23:47
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As someone who used to be an IT contractor in the UK and used to work from home, my advice is to talk to your accountant in detail.

It's been a few years, but IIRC you can write off some small stuff like proportional heating costs etc, but in my case it was so minuscule that it wasn't worth the effort. You're likely better off to just leave it.

<subliminal message> Talk to your accountant :). </subliminal message>

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