I was wondering if this is possible and if so at what kind of hourly rate?
Thx (as usual) in advance for all your views
Charging my time to the tax man
Charging my time to the tax man
15/16 is our first qualifying year a a FHL. To date we haven't been charging our own time spent managing the lodge back as an expense.
I was wondering if this is possible and if so at what kind of hourly rate?
Thx (as usual) in advance for all your views
I was wondering if this is possible and if so at what kind of hourly rate?
Thx (as usual) in advance for all your views
You can't do this and there's no point in doing this either.
Think about it like this. If you paid someone to do the work, you would then be able to include it in your tax and claim it back as an expense. However, the person you paid to do the work would then have to pay tax on the money you paid them. If you are the person you paid, you then have gained precisely nothing.
Think about it like this. If you paid someone to do the work, you would then be able to include it in your tax and claim it back as an expense. However, the person you paid to do the work would then have to pay tax on the money you paid them. If you are the person you paid, you then have gained precisely nothing.
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nuneatonmark
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Jemima Copping
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Charging for time spent
You can charge for the use of home as office I think. Check with the HMRC website. When the time comes to file your return which will be next year for year 15/16, the HMRC run webinars on the run up to Jan 31st, which is the last day for sending in your return. I found them very useful as year14/15 was my first year with my holiday let. You can ask anything and get a reply almost immediately. Also phoning them first thing in the morning you will get someone answering almost straight away.
Better to be mutton dressed as lamb than mutton dressed as mutton!
There is ( or used to be) a risk in doing that: for example, if you claim 10% of the running costs of your home as an office (ie. business expense) then you could be subject to the same percentage (CGT) charge on any profit you make when you sell your home.
We did this for a few years (15y ago), then discontinued as the risk of the charge outweighed the benefit.
Your accountant would probably give you the best advice, for your situation.
We did this for a few years (15y ago), then discontinued as the risk of the charge outweighed the benefit.
Your accountant would probably give you the best advice, for your situation.
I have no knowledge in these matters, but I think it might just be viable even with only a single letting property which is owned by a company. If you attended to all the marketing, the general administration, plus perhaps the maintenance and cleaning, and the company was owned by someone else, surely you would expect to be paid. So what's the difference if you owned the company? Nothing, so far as I can see. OK, you would have to pay income tax on that as you would with any wage received. The company's corporation tax liability (on rents received) would be reduced on account of the wage it paid you.nuneatonmark wrote:Unless your holiday home was owned by a company and you took a wage in order to run the business. Not really viable for a single holiday let though!
To cover all the above tasks for a single letting unit I might want to charge a flat monthly fee of say £500 (or the equivalent in US Dollars, or Euros) - that's just a ball park figure. If you stop to think about it, there is a fair amount of work involved in running your letting business. It is not always unpleasant work or too arduous, but it does take up time and effort.
Re: Charging for time spent
Jemima Copping wrote:You can charge for the use of home as office I think. Check with the HMRC website.
This is the link for the simplified expense route of claiming a fixed rate for use of home as office. HMRC has set these rates so you don't have to work anything out. https://www.gov.uk/simpler-income-tax-s ... s/overviewZingara wrote:There is ( or used to be) a risk in doing that: for example, if you claim 10% of the running costs of your home as an office (ie. business expense) then you could be subject to the same percentage (CGT) charge on any profit you make when you sell your home.
We did this for a few years (15y ago), then discontinued as the risk of the charge outweighed the benefit.
Your accountant would probably give you the best advice, for your situation.
This link is for examples if you want to claim a proportion of costs. http://www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm
Finally, a useful article if you go down the proportional route. If you ensure that the room is used part of the time for domestic use and isn't exclusively business use, you can get round the capital gains issue. http://taxaid.org.uk/guides/information ... -as-office
But if "you" happened to be (for example) a director of a Ltd Co that carried out such services, then "you" (the individual holiday prop owner) could legitimately offset an amount (so reduce tax) and at the same time pay tax more efficiently as "you" the director. Plenty of BTL landlords do something similar (Ltd Co often takes the form of a letting agency) but only person who can tell you whether or not it would be viable for a single property (or your scenario) would be your accountant.newtimber wrote:You can't do this and there's no point in doing this either.
Think about it like this. If you paid someone to do the work, you would then be able to include it in your tax and claim it back as an expense. However, the person you paid to do the work would then have to pay tax on the money you paid them. If you are the person you paid, you then have gained precisely nothing.
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Happiness is a journey not a destination,
So work like you don’t need the money,
Love like you’ve never been hurt,
and Dance like no one’s watching…
So work like you don’t need the money,
Love like you’ve never been hurt,
and Dance like no one’s watching…
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akwe-xavante
- Posts: 306
- Joined: Wed Jul 01, 2015 3:19 pm
- Location: East Yorkshire
There are always other ways around things. If you are trying to reduce your tax liability by increasing allowable expenses. In your case your saying that you want to do this by taking a wage for your own efforts in addition to profits from the venture. You should declare this and pay tax whichever way you do it.
Unless things have changed I believe that you are allowed to pay for casual labour without having to declare who such payments have been made to as long as the amount is less than I think is £40. Can't remember whether this was or is a daily or weekly amount. Within the building trades its £40 a day but not everyday, every week otherwise you should be employing someone.
It is very important though to document who the payments are too, how much and what for just in case inland revenue ask questions in future but this should not happen unless your "taking the Micky".
Payments for casual labour can be for anything that you may be doing yourself and may include for example gardening, cleaning the windows, putting the wheelie bins out every week (you may be paying a neighbour to do it for you) you could be paying a neighbour to periodically check your property for you over the winter! Who takes the laundry to the laundrette and picks it back up again, it doesn't have to be you, you could be paying someone to do it for you as casual labour. Who takes the garden refuse to the tip for recycling, you may be doing these things yourself but you could be paying someone to do it for you wink wink. When you replace an item of furniture it's far too heavy for you and or the cleaner to lift and move so you employ a gorilla to do it for you. it's not unreasonable to pay £20 to someone to do this as casual labour. just make a note of when, why and what the £20 was for. Because it's such as small amount and a casual expense inland revenue will not be interested in such payments unless of course you go too far, too often.
Be careful though, don't take the micky and go too far and work within the rules.
Casual Labour is an allowable expenditure without declaring who the payments were made too.
No body pays tax on casual labour given or received as long as it's within acceptable boundaries and reasons.
Checkout what the rules are though for yourself.
Unless things have changed I believe that you are allowed to pay for casual labour without having to declare who such payments have been made to as long as the amount is less than I think is £40. Can't remember whether this was or is a daily or weekly amount. Within the building trades its £40 a day but not everyday, every week otherwise you should be employing someone.
It is very important though to document who the payments are too, how much and what for just in case inland revenue ask questions in future but this should not happen unless your "taking the Micky".
Payments for casual labour can be for anything that you may be doing yourself and may include for example gardening, cleaning the windows, putting the wheelie bins out every week (you may be paying a neighbour to do it for you) you could be paying a neighbour to periodically check your property for you over the winter! Who takes the laundry to the laundrette and picks it back up again, it doesn't have to be you, you could be paying someone to do it for you as casual labour. Who takes the garden refuse to the tip for recycling, you may be doing these things yourself but you could be paying someone to do it for you wink wink. When you replace an item of furniture it's far too heavy for you and or the cleaner to lift and move so you employ a gorilla to do it for you. it's not unreasonable to pay £20 to someone to do this as casual labour. just make a note of when, why and what the £20 was for. Because it's such as small amount and a casual expense inland revenue will not be interested in such payments unless of course you go too far, too often.
Be careful though, don't take the micky and go too far and work within the rules.
Casual Labour is an allowable expenditure without declaring who the payments were made too.
No body pays tax on casual labour given or received as long as it's within acceptable boundaries and reasons.
Checkout what the rules are though for yourself.
Some other related stuff that may be of use. I concede that I can't recall the original source of this but I've found it works as a useful memory jogger...I suppose if in doubt one could always ask their local MP 
<snip>
The Inspector of Taxes (HMRC) will allow revenue expenditure as a deduction from your freelance income when it is incurred wholly and exclusively for the purposes of your profession. The following is a list of the expenditure which HMRC will normally allow:-
Accountants Fees including bookkeeping fees.
Advertising, publicity, brochures, photographs, business cards and flyers.
Agents commission.
Bad debts (included in turnover).
Bank charges.
Books not retained for more than two years.
Bulbs, fuses, locks, keys, plugs, leads and minor repairs.
Casual labour (check whether to be paid through PAYE).
Computer consumables including CDs, DVD, USB memory sticks, external hard drives, (backup) and software annual licence fee.
Courier charges.
Data protection registration and renewal fees.
Workwear.
Hire of protective clothing/ uniform.
Laundering and dry cleaning of protective clothing/ uniform.
Cost of protective clothing/ uniform.
Specific workwear for engagement (at behest of engager and no private use).
Gifts to charity/ local good causes and gifts to customers costing up to £50 and bearing the business name.
Heat and light – calculate business use on area occupied.
Hire and lease.
Hotel accommodation.
Insurance including office and business property policies.
Interest.
Journals and catalogues.
Legal costs including fee recovery and to fix engagements.
Miscellaneous expenses – give a full description of each item and state why you are claiming it.
Motoring expenses (include motor cycle and/ or car), keep a log of the total and business mileage for each vehicle so that the business element can be calculated:-
Breakdown subscription/ insurance.
Car hire, petrol allowance to shared car driver.
Car repairs, servicing, MOT, oils, antifreeze.
Motor insurance.
Parking at engagements, tolls and ferries.
Petrol.
Road fund licence.
Newspapers and journals (if specific to your work).
Own property – calculate business percentage on floor area:-
Cleaning.
Insurance.
Rent and rates.
Repairs and maintenance.
Photocopying and printing.
Porterage, carriage, securicor.
Postage
Purchases of stock/ materials.
Recording equipment.
Batteries for radio/ cassette recorder/ calculator.
Memory cards.
Removal expenses.
Research assistance and material.
Rent and rates of premises – calculate business percentage on floor area basis.
Royalties.
Secretarial assistance including payments to spouse/ partner at the market rate for the work provided – to be paid through PAYE system.
Seminars.
Software for your computer, web domain registration and hosting fees.
Tools – hand and electric (not kept for more than 2 years).
Staff welfare including first aid and beverages and Christmas party.
Stationery and printing including inkjet cartridges and toner.
Subscriptions to professional bodies.
Subsistence – you are allowed to claim the cost of all your meals when on overseas engagements. Only claim the cost of the evening meal when on tour in the UK and daytime meals incurred on business travel.
Subcontractors.
Telephone:-
Landline – request call transaction listing from the line provider to calculate business amounts.
Internet connection.
Mobile.
Coin box calls.
Training for engagements in hand.
Travel:-
Bicycle repairs and maintenance, consumables and insurance – calculate the business use on a mileage basis.
Fares to the engager.
Fares to other than engager, e.g. suppliers, libraries, seminars.
Inoculations.
Travel cancellation fees.
Travel insurance.
Visas.
Use of home as office.
Wages and salaries – to be paid through PAYE.
Warranties. e.g. PCs.
Capital Expenditure
A deduction from your taxable income can be made in respect of your expenditure on “Fixed Assets” namely the movable tangibles likely to last over two years that are used in your business. The following are some examples:-
Agricultural buildings and works.
Bicycle.
Books including reference books.
Camera, projector, screen.
Carrying case.
Computer and printer.
Fax Machine.
Goodwill.
Industrial buildings.
Know-how.
Legal expenses on purchase of property.
Motorcycle.
Motor vehicle including car and van.
Office furnishings including carpets and curtains.
Office furniture including desk, chair, filing cabinets and bookcase.
Plant and machinery (equipment).
Property.
Photocopier.
Research and development.
Telephone including mobile phone.
Remember that when you commence your business that you can claim capital allowances on the “Fixed Assets” which you have introduced to the business even if you purchased the item several years before you commenced your business.
</snip>
.
<snip>
The Inspector of Taxes (HMRC) will allow revenue expenditure as a deduction from your freelance income when it is incurred wholly and exclusively for the purposes of your profession. The following is a list of the expenditure which HMRC will normally allow:-
Accountants Fees including bookkeeping fees.
Advertising, publicity, brochures, photographs, business cards and flyers.
Agents commission.
Bad debts (included in turnover).
Bank charges.
Books not retained for more than two years.
Bulbs, fuses, locks, keys, plugs, leads and minor repairs.
Casual labour (check whether to be paid through PAYE).
Computer consumables including CDs, DVD, USB memory sticks, external hard drives, (backup) and software annual licence fee.
Courier charges.
Data protection registration and renewal fees.
Workwear.
Hire of protective clothing/ uniform.
Laundering and dry cleaning of protective clothing/ uniform.
Cost of protective clothing/ uniform.
Specific workwear for engagement (at behest of engager and no private use).
Gifts to charity/ local good causes and gifts to customers costing up to £50 and bearing the business name.
Heat and light – calculate business use on area occupied.
Hire and lease.
Hotel accommodation.
Insurance including office and business property policies.
Interest.
Journals and catalogues.
Legal costs including fee recovery and to fix engagements.
Miscellaneous expenses – give a full description of each item and state why you are claiming it.
Motoring expenses (include motor cycle and/ or car), keep a log of the total and business mileage for each vehicle so that the business element can be calculated:-
Breakdown subscription/ insurance.
Car hire, petrol allowance to shared car driver.
Car repairs, servicing, MOT, oils, antifreeze.
Motor insurance.
Parking at engagements, tolls and ferries.
Petrol.
Road fund licence.
Newspapers and journals (if specific to your work).
Own property – calculate business percentage on floor area:-
Cleaning.
Insurance.
Rent and rates.
Repairs and maintenance.
Photocopying and printing.
Porterage, carriage, securicor.
Postage
Purchases of stock/ materials.
Recording equipment.
Batteries for radio/ cassette recorder/ calculator.
Memory cards.
Removal expenses.
Research assistance and material.
Rent and rates of premises – calculate business percentage on floor area basis.
Royalties.
Secretarial assistance including payments to spouse/ partner at the market rate for the work provided – to be paid through PAYE system.
Seminars.
Software for your computer, web domain registration and hosting fees.
Tools – hand and electric (not kept for more than 2 years).
Staff welfare including first aid and beverages and Christmas party.
Stationery and printing including inkjet cartridges and toner.
Subscriptions to professional bodies.
Subsistence – you are allowed to claim the cost of all your meals when on overseas engagements. Only claim the cost of the evening meal when on tour in the UK and daytime meals incurred on business travel.
Subcontractors.
Telephone:-
Landline – request call transaction listing from the line provider to calculate business amounts.
Internet connection.
Mobile.
Coin box calls.
Training for engagements in hand.
Travel:-
Bicycle repairs and maintenance, consumables and insurance – calculate the business use on a mileage basis.
Fares to the engager.
Fares to other than engager, e.g. suppliers, libraries, seminars.
Inoculations.
Travel cancellation fees.
Travel insurance.
Visas.
Use of home as office.
Wages and salaries – to be paid through PAYE.
Warranties. e.g. PCs.
Capital Expenditure
A deduction from your taxable income can be made in respect of your expenditure on “Fixed Assets” namely the movable tangibles likely to last over two years that are used in your business. The following are some examples:-
Agricultural buildings and works.
Bicycle.
Books including reference books.
Camera, projector, screen.
Carrying case.
Computer and printer.
Fax Machine.
Goodwill.
Industrial buildings.
Know-how.
Legal expenses on purchase of property.
Motorcycle.
Motor vehicle including car and van.
Office furnishings including carpets and curtains.
Office furniture including desk, chair, filing cabinets and bookcase.
Plant and machinery (equipment).
Property.
Photocopier.
Research and development.
Telephone including mobile phone.
Remember that when you commence your business that you can claim capital allowances on the “Fixed Assets” which you have introduced to the business even if you purchased the item several years before you commenced your business.
</snip>
.
Happiness is a journey not a destination,
So work like you don’t need the money,
Love like you’ve never been hurt,
and Dance like no one’s watching…
So work like you don’t need the money,
Love like you’ve never been hurt,
and Dance like no one’s watching…
The owner of an FHL cannot charge their time as an expense and even if you could do so their would be no point as you would just be replacing one source of income with another and the tax affect would be zero.
If the ownership is different then a charge might be possible but not always appropriate - little point in saving tax at 20% to pay tax elsewhere at 20%.
I would be very careful with "casual labour" - HMRC are interested in these payments ("income is income" and taxable whether casual or not) and they may well demand receipts to justify any expenses claimed, or at least the name of the person being paid.
If the ownership is different then a charge might be possible but not always appropriate - little point in saving tax at 20% to pay tax elsewhere at 20%.
I would be very careful with "casual labour" - HMRC are interested in these payments ("income is income" and taxable whether casual or not) and they may well demand receipts to justify any expenses claimed, or at least the name of the person being paid.
Happy to answer tax questions_not sure about anything else!
https://www.facebook.com/oldstablecottage
https://www.facebook.com/oldstablecottage
Thanks. That all makes sense.Justphil wrote:The owner of an FHL cannot charge their time as an expense and even if you could do so their would be no point as you would just be replacing one source of income with another and the tax affect would be zero.
If the ownership is different then a charge might be possible but not always appropriate - little point in saving tax at 20% to pay tax elsewhere at 20%.
I would be very careful with "casual labour" - HMRC are interested in these payments ("income is income" and taxable whether casual or not) and they may well demand receipts to justify any expenses claimed, or at least the name of the person being paid.