Specialist Tax News

Using your home for business?

We always look to maximise your tax breaks if you use your home for business, as they can be considerable (with care). For example, if there is non-exclusive business use of a room in your home, there is a claim which can be made for a proportion of the running costs; this does not automatically result in a restriction to the valuable CGT exemption on sale of the main private residence. This is because a claim for, say, 90% business use of one room means that the room was not used exclusively for business purposes and accordingly no loss of CGT relief applies.

Sometimes it is simpler to make an expenses claim based on a round-sum allowance for the general business use of the home, which would certainly eliminate any restriction of the CGT exemption. The above situation is hardly likely to arise where, for example, the business you carry out at your home address is that of a dentist, doctor, vet or architect, i.e. plenty of activity in terms of patients, customers or clients visiting you. Indeed there may be separate buildings used solely for business use.

As you may imagine, in such a case there are all sorts of clever things which can be done to maximise the CGT residence exemption on a sale and at the same time ensure that the gain which is taxable suffers tax at only 10%, because it qualifies for entrepreneurs’ relief. Planning is essential to achieve this result.

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