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Using your Home for Business
Did you know that there may be tax consequences if you use your home for business or rent any part of it out?
Renting a room
For the current tax year starting 6 April 2016 you can let out rooms in your house as furnished accommodation and as long as this income does not exceed £7,500 per year this income will be tax free. If 2 people share the income then above annual tax free limits are halved. This does not apply to renting out your home for office purposes.
Use of your home for business use
You will be able to charge your business a nominal amount for using your home for business use. The claim needs to be restricted by how many hours in a year you use a room for business use. Claims needs to be a realistic apportionment of actual costs and discounted by private use.
Renting your house out
If you rent your house out and receive rental income you will need to inform HMRC that you are a landlord and your rental income will need to be declared on your annual tax return. You will be able to offset certain costs against this income. When you do come to sell a house that you have rented out you may need to pay capital gains tax on the profit on sale. Careful tax planning needs to be undertaken when renting your house out or selling a house that you have previously rented out.
If any of this confuses you we will be more than happy to help. Call us today or contact us via our website.