Tuesday 13 August 2013
Monday 12 August 2013
An interval - Beethoven
@AndreaNiloc Now we have everyones attention.... http://t.co/gVy111EAIh #Beethoven #BarenboimMozart anyone?
— Morning chorus (@ianbrealey) August 12, 2013
http://www.youtube.com/watch?v=E2LM3ZlcDnk
Stunning. classical music mix and fish. Lots of fish.
http://www.youtube.com/watch?v=keps7ZEtR7s
Thursday 8 August 2013
Use of Home as Office 2013/14 - including example
As mentioned in the previous blog, the 2013/14
Revenue & Customs Brief has included a new set of optional rules designed
to simplify various forms of expenses for sole traders and partnerships. The
expenses claim that is being concentrated on in this blog is the expenses
claimed when the office in the home is used as part of the business. The room
in the house where work takes place must be wholly and exclusively used as an
office or similar work environment.
Previously, the
method of calculating claims was by apportioning the actual expenditure of the
house between the room where the office is based (for the business) and the
remainder of the private home. This can still be used from the tax year 2013/14,
but the new brief has designed an alternative flat rate for the running
expenses so to simplify it for the small businesses. Fixed costs are not
covered in the flat rate so must still be apportioned like the old method.
The new flat rate
suggests monthly amounts for the running costs of the office in the home based
on the amount of hours worked from home in the month. These are:
Hours worked at
home in the month
|
Flat rate per month
|
25 hours or more
|
£10
|
51 hours or more
|
£18
|
101 hours or more
|
£26
|
Example (relevant
from 2013/14 tax year)
James works 20 hours
a week from his home office, and only uses this office for business purposes.
His home office is one of 10 rooms in the house which he owns as opposed to
rents.
-
His annual council tax is £2500, house insurance
is £800 and mortgage interest is £6000 for the whole home.
-
Working 20 hours a week, his monthly flat rate
for running costs falls in the £18 a month bracket, meaning £216 for the year
for variable costs.
Home Office
Expenses
|
£
|
Fixed Costs for
house
|
|
Mortgage interest
|
6000
|
Council Tax
|
2500
|
Insurance
|
800
|
Total Fixed Costs
|
9300
|
|
|
Fixed Costs for
Office (1/10)
|
930
|
Flat rate (for
Office)
|
216
|
Total Expenses for Home
Office
|
1146
|
The Fixed costs are apportioned
to the office on the basis of the amount of rooms in the home. As there are 10
rooms in the property, 10% of the total fixed cost is given to the home office
for the business. This method of apportioning is what would be used for running
costs if the simplified expenses rules were ignored.
Friday 2 August 2013
Simplified Expenses for 2013/14
Included in the
2013/14 Revenue & Customs Brief are a new set of optional rules designed to
simplify the expenses for certain parts of a sole trade or unincorporated
partnership. Their aim is to aid small businesses with more efficient methods
to calculate their expenses. The types of businesses that can use the new rules
are:
-
Businesses with vehicles – business mileage
deductions have a new simplified alternative to apportioning the actual costs.
-
Adjustments to businesses such as a small hotel
or B&B who live on the premises of the business.
-
Businesses which use part of their home as an
office.
Whether these new
simplified rules are beneficial to your business can only be assessed on a case
by case basis. The alternative method for calculating expenses may actually be
more suitable to your company.
Business Mileage Deductions
The new rules for
2013/14 business mileage deductions keep the same flat rates as previously:
-
£0.45 per mile for the first 10,000 miles.
-
£0.25 per mile for every mile after.
The main difference
is that they cover all running costs and capital allowances of the vehicle so
there are no further costs. They also now have a statutory effect as opposed to
previous years. It is aimed at smaller businesses with perhaps only one vehicle;
however the flat rate must always be used for that vehicle.
The flat rate doesn’t
have to be used for all the vehicles in the business, the method of
apportioning the actual costs between business and private use can also be
applied. If capital allowances on that particular vehicle have already been
claimed, the flat rate cannot be used.
Board & Lodging Adjustments
This is for businesses that live on the site
of their small hotel, guesthouse or B&B, it is only for such businesses
which the main use is for their trade. The adjustments are a new simplified
version of the agreements between HMRC and the business which were previously
in place.
The new rule
calculates the portion of the running costs which are used in the private part
of the home, and which can therefore be deducted off the total costs to find
the total deductible business expenses. It is based on the number of people who
reside in the private part of the premises (including children):
Number of people
|
Flat rate per
month
|
1
|
£350
|
2
|
£500
|
3+
|
£650
|
The running cost includes all household goods and services,
food and non-alcoholic drinks and utilities. It does not include fixed costs
such as mortgage interest, property insurance or council tax.
Transitional rules
for businesses which used the previous boarding and lodging agreements with
HMRC are as follows:
-
If had an agreement in place for 2012/13 then it
can be used for the 2013/14 tax year, however from 2014/15 it can no longer be
used and the flat rate or actual basis must be used. This is in place to give
time for businesses to consider which method they would now like to employ.
-
No new agreements can be made from 2013/14 as
they are being withdrawn.
Use of Home as Office
The new rule again
creates a flat rate on the basis of hours using the office in the home over the
month, to deduct as expenses. It is a monthly flat rate which covers the
running costs of the home office (heat, light, power, telephone, broadband) but
it does not include the fixed costs (rent/mortgage interest, council tax,
insurance), these need to be apportioned from the private costs of the home.
The flat rate method acts as an alternative to apportioning the total cost of
the home, and apportioning the business element.
The Flat rate amounts
are as follows:
Total hours
using the office
|
Flat rate per
month
|
25 hours +
|
£10
|
51 hours +
|
£18
|
101 hours +
|
£26
|
The office must be wholly and exclusively used for business
purposes in order for it to qualify.
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