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If you Work From Home, either as a self employed entity or as an employee, then you may possibly be looking at what tax breaks might be presented to you because you are making business use of some of your personal assets in the operation of the company . An Internet Business for example might be operated from home taking up a remote room which nesscitates heating and lighting. Also computers and any other office equipment such as photocopiers or printers and fax machines are eating up your personal electricity. Most online jobs demand the same amount of operating costs when run from home so it is enticing to consider assessing all these costs, which would not have developed if you did not Work From Home, group them together as organisation expenses and try to claim them as allowable against tax. It is a very sensible argument that you should not have to pay such expenses out of taxed income and indeed most accountants would agree with this belief. Your internet business, any online jobs you have, or any other work from home situations should not be subsidised out of your own money, especially after you have paid tax in the first place.
But be aware of how far you take this. For example you may be tempted to add to this list of expenses a section of your council tax bill. Imagine you need an whole different place to enable you to work from home, a place dedicated to your Internet Business or Online Jobs. This place is used for nothing else so you can reasonably argue that if you didn’t work from home, you wouldn’t need this additional place and so your house could be smaller and your council tax bill thereby made smaller. You may possibly argue that your company should therefore foot the bill for a percentage of the council tax bill and that this should be allowable against tax on profits made from your business. You could compute the amount of council tax reclaim as the amount of the floor area of your Work From Home room to the entire floor area of your house. Let’s say that amounts to 10%, you could argue that 10% of your council tax bill is directly attributable to your business and therefore us a business expenditure allowable against profit. This might very well be agreeable but the hazard lies in the future.
Assume that you had claimed as above for a number of years, regularly setting off that 10% and lessening your tax bill accordingly. Then one day you sell your house and you realise a very large profit. (If you own a house for a number of years then you almost definitely will). In the normal way of things any profit made from the appreciation of a property that has been used only for residential purposes is tax free. But if the property has been partlyused for business use then the revenue may reasonably claim that a percentage. The fact that you had regularly made claims for council tax would be good evidence to support any such claim by the revenue and the net effect could be a big and unavoidable tax liability far greater than the savings you made over the years.