CGT / PPR Relief and Working from Home

[jeny]

Hi I am just wondering if anyone might know the answer to this:

If i set up a small business from home (part time) and work from my spare room, will this only effect my entitlement to PPR if i claim a portion of my home expenses in my Income Tax?

If I just work there and claim no portion of light / heat etc will i still be entitled to full PPR if i was to sell.

Also would the rental of a spare room ( for less than the yearly amount alowed giving no rise to Income Tax) effect the entitlement to this relief in the event of sale?

Im hoping this makes sense.

 

[Graham_07]

If you claim expenses then you are definitely opening the door to possible CGT charge on disposal. Not claiming dose not automatically eliminate the possibility of CGT as one is still running a business from the premises but the argument as to how much or little the property was used for business becomes more subjective.

Rent received under the Rent-a-room scheme does not affect PPR relief.

 

[Setanta12]

Hmmm .... I believe you can operate a business from home, claim an appropriate percentage of light and heat etc and still avail of full PPR entitlement upon selling your PPR.

The key thing here is that the space used for th work should be fully capable of being used as a resiudence also i.e. I have always advised clients to store their golf clubs under their desk, encourage the kids to play in the room ar various stages throughout the day, definitely in the evenings and weekends.

The difficulty is where there is exclusive business in a room in the house.

 

[Graham_07]

I have always advised clients to store their golf clubs under their desk, encourage the kids to play in the room ar various stages throughout the day, definitely in the evenings and weekends.

Time to bring the snooker table and the Wii into the home-office I think.

Interestingly a few weeks back was a Prime Time about business failures/liquidations etc. one interviewee was a liquidator and all his files were spread across a snooker table. !

 

[jeny]

Oh Thanks, Well it would definately not be exclusively used so work, Its currently my daugthers bedroom, and until i build up a client base il be working on my kitchen table!

I was just wondering as I am trying to open up a bank account and they are asking for the "business address" and I dont want to end up fighting with Mr Tax Man should I ever decide to sell the house in a few years time.

 

[Setanta12]

hehehe - this could still be the case (arguing witht he tax-man)!

But I cannot think of stronger grounds than what you've stated for showing that your residence is your residence and that the occasional business use was ancillary to its daily use as a residence.

I would go for it - but do not be greedy re the expenses re the esb and light and heat. For example, do not claim say 1/7 of the household esb as business esb because you got 7 rooms - this would lead anyone to conclude that one room of the seven was exclusive for the business; you need to show minimal expenses which in truth is all they should be ! Minimal, very minimal !