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Capital Gains tax on office in house
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If I claim for tax relief on a spare room, electricity etc fro aa room I use as an office in my house would I be pay capital gains on part of my house when I sell it?
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If you're self-employed, and do any work from home, you should certainly be 'renting office space from yourself' for tax purposes. Well before you need to worry about Capital GainsTax, the first thing to consider is whether you'll have to pay business rates, as well as (or partially instead of) Council Tax. The Valuation Office provides examples of when they will, and won't, regard parts of a residential address as liable for business rates, here:
http://www.voa.gov.uk...working_from_home.htm
Simply keeping a bed, wardrobe and bedside cabinet in the spare bedroom (so that its use as an office could be regarded as secondary to its prime purpose of being a guest room) might be enough to avoid having to pay business rates.
If you have to pay business rates on part of your home, you might find that this is offset by lower council tax. However your coucil tax would only fall if the valuation of the residential part of the house took the property into a lower tax band than when the whole of the house was taken into consideration. That wouldn't happen in every case.
If the Valuation Office regards part of your house as 'business premises', then it's like that HMRC would also do so when it came to considering whether CGT was also payable.
Chris
http://www.voa.gov.uk...working_from_home.htm
Simply keeping a bed, wardrobe and bedside cabinet in the spare bedroom (so that its use as an office could be regarded as secondary to its prime purpose of being a guest room) might be enough to avoid having to pay business rates.
If you have to pay business rates on part of your home, you might find that this is offset by lower council tax. However your coucil tax would only fall if the valuation of the residential part of the house took the property into a lower tax band than when the whole of the house was taken into consideration. That wouldn't happen in every case.
If the Valuation Office regards part of your house as 'business premises', then it's like that HMRC would also do so when it came to considering whether CGT was also payable.
Chris
Good advice, Chris.
I believe that you should NOT be making any suggestion that you are dividing up the square footage of the whole house and allocating a part of it to your 'office'. It will very likely lead to this business rates scenario of you do.
There's a obscure rule somewhere in the bowels of HMRC documentation that allows you to offset a maximum of £2 per week as a claim without proof via receipts etc. That's £100 per year - and probably not far off what you might have allocated by calculating the other way. I'll try and find the link if you really need it.
I believe that you should NOT be making any suggestion that you are dividing up the square footage of the whole house and allocating a part of it to your 'office'. It will very likely lead to this business rates scenario of you do.
There's a obscure rule somewhere in the bowels of HMRC documentation that allows you to offset a maximum of £2 per week as a claim without proof via receipts etc. That's £100 per year - and probably not far off what you might have allocated by calculating the other way. I'll try and find the link if you really need it.
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