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Self employed tax question
6 Answers
We work as holding managers in the hospitality industry. Part of that involves living in accommodation as we are often far from home. The only bill we have to pay regarding the accommodation is the domestic rates.
My question is: Can we claim back the rates against tax?
We maintain a 'main' home elsewhere.
My question is: Can we claim back the rates against tax?
We maintain a 'main' home elsewhere.
Answers
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The key question for HMRC (who are the primary decision-makers - unless you take a test case to court when the courts decide) is whether the expenditure is 'wholly and exclusively' for business purposes. I doubt that anyone on here can give you a definitive answer to that - a tax accountant may be able to point you to previous cases where HMRC has taken a particular line.
There is more about this here.
http://www.hmrc.gov.u...relief-self-emp.htm#2
I suspect that since the sole purpose is not business-related, you are chancing your arm.
But I'd keep quiet for another reason: -
You talk about being a 'holding manager' - I trust therefore that you work for more than one organisation in this capacity? - if you work for one, that sounds like 'employed' status to me and a whole lot of other expenses that may therefore be claiming could be disallowed.
An area where I have come across something similar is teaching staff employed in the independent sector of boarding houses but not employed in the boarding houses themselves. These people do not pay anything for their accommodation at all and maintain another residence (that most rent out). Under the terms of deals done with HMRC, there is an 'assessed value' of the benefit in kind on which such people have to pay income tax. That sounds rather similar to your situation, so I am wondering whether you are already working outside of the position that HMRC would take on the matter, since you pay no tax on this. It may depend on whether you rent out your main residence.
There is more about this here.
http://www.hmrc.gov.u...relief-self-emp.htm#2
I suspect that since the sole purpose is not business-related, you are chancing your arm.
But I'd keep quiet for another reason: -
You talk about being a 'holding manager' - I trust therefore that you work for more than one organisation in this capacity? - if you work for one, that sounds like 'employed' status to me and a whole lot of other expenses that may therefore be claiming could be disallowed.
An area where I have come across something similar is teaching staff employed in the independent sector of boarding houses but not employed in the boarding houses themselves. These people do not pay anything for their accommodation at all and maintain another residence (that most rent out). Under the terms of deals done with HMRC, there is an 'assessed value' of the benefit in kind on which such people have to pay income tax. That sounds rather similar to your situation, so I am wondering whether you are already working outside of the position that HMRC would take on the matter, since you pay no tax on this. It may depend on whether you rent out your main residence.
Thank you buildersmate. Our position does sound similar to the teachers you mention. We do not rent out our home due to the unpredictability of our work, we could be given short notice to move out if the lease is sold. I understand that we are in a grey area regarding our employed/self-employed status but all records are kept and until we are told that we are doing wrong I am acting in good faith.
My logic is that we would not need the accommodation if we wore not working there. The councils will often grant a 50% reduction in the rates based on this argument.
Than you for your answer and will bear your points in mind.
My logic is that we would not need the accommodation if we wore not working there. The councils will often grant a 50% reduction in the rates based on this argument.
Than you for your answer and will bear your points in mind.
Well, without pushing you to state whether you work for just organisation or not, it is normally for the employer and not the self-employed to establish the position regarding the 'employed' status of those that work for them. Which means that if HMRC query it with the organisation with whom you have a contract, it would be them that have to stump up the employer's NI and any shortfall in the employee's NI (shortfall between what you pay as SE and what the full-rate as employed would be). Consultancy employing organisations that realise this generally put the onus back on the SE by making it a contractual clause that it is for the SE to fund any shoftfall if HMRC get shirty about it.
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