Self Employed Tax Question

[Tarser]

Years ago I had someone convert my garage to a 'studio' for me to teach musical instruments away from the house. Now, a decade or so on, the garage is leaking rain and there's damp getting in. It's a case of give up teaching or repair the garage again.

I've had a quote and it's a lot! As this would be entirely for my business, I asked my accountant if it would be tax deductible. She emailed me back and said that I could claim 29% of the internal work but not the external work. Without a good roof, however, there would be no point in getting the interior done!

I mentioned this to my brother's wife who is a lecturer in accountancy and she told me something quite different. She said that if the building is unfit for purpose, the entire cost of renovation could be claimed against tax which would mean that I wouldn't pay a penny of tax in a year.

Who is correct? Can you give me a link to any documents that might help. I can't face a day on the phone to the HMRC, knowing that nobody is going to answer. Thank you!

[ummmm]

I would put the whole cost through and let HMRC question it.

[fiction-factory]

I would have thought you would have to show the expense was incurred wholly, exclusively and necessarily in the performance of your duties. Given that when you stop work the studio will still have a value I doubt you can offset the full value against tax.
I also think the cost may have to be spread over several years.
But there are some tax experts on here - hopefully they will see this and help. My guess is your accountant is more correct

[Dogsbody2]

This is a very technical area, and your accountant would be expected to be good at at - that's why you are paying him. I think your accountant is correct.

The basis of any claim is against the proportion of the residential property that is used wholly for business purposes, and the HMRC guidance in this area is considerable and starts at BIM47815 here:

http://www.hmrc.gov.uk/manuals/bimmanual/bim47815.htm

From there, you might want to read BIM47825 (which gives examples using scenarios), and there are other pages that you may wish to look at.

Quoting 29% claimable of the internal work is a very precise figure, and my guess is that your accountant knows the proportion of your converted garage as a percentage of your total floor area in arriving at it.

If, once you have read around my links, you still have questions, I suggest you ask your accountant. I suspect he he knows something that I also know - you have to be careful with making claims for business use of a residential property or HMRC, when you eventually sell the property, will sting you for liability to Capital Gains Tax. This comes about because, although your Principal Private Residence is except from CGT, a partial use of your PPR for business can be treated as a commercial capital gain.

I suspect your accountant knows that claiming for capital repairs may throw you into this issue.

Alternatively you could take Ummm's advice. Clearly a lady who knows a lot about these things.

[Peter Pedant]

hulloyoung man.
I am not very technical
here is a quote from the ref ( and then a lead-on ref ) from Dogz exciting URL. He certainly knows his stuff on tax

"A proportion of the cost of general household repairs and maintenance is allowable in line with the proportion that the house is used solely for the trade. Examples include the general redecoration of the exterior or repairs to the roof.

"Repairs that relate solely to part of the house that is not used for the trade, such as decorating a room not used for the trade, are not allowable. Equally if a room is used solely for trade purposes then the cost of redecorating that room is wholly allowable."

I suppose your lecturer is taking the garage as a separate building and the rules may be different ( as you are using THAT solely for a purpose ) . I dunno

I would NOT take Umm's advice even tho Dogz said she Knew Things we dont. but then I have had a tax investigation and would rather have my finger nails torn out by WIld ultra religious Muslims to be honest.

and finally - if you have a dog, why are you barking ?
that is if you have and pay for the services of an accountant why are you asking if he is right or not ? and asking us for chrissakes

I looked for a long time for an accountant who had a lot of professionals on his books and yes you pay for stuff he knows that you dont - even tho on other threads you will read the usual suspects saying Oh it is easy ! - you dont need one of them !

and thx also to Dogz - I will look forward to reading Caillebotte the leading case on all this - I know I am a sad donkey and need hellp myslef.