Working from home?

A client asked me about working from home…

She spends time working from home and wishes to claim a deduction against her trading profits for use of home expenses. She doubts whether the income tax savings will be significant and could easily be outweighed by future capital gains tax payable because of a loss of principal private residence relief. What should she do?

It is possible there is no capital gains tax problem to worry about. The legislation denies PPR relief to that part of a gain which is attributable to any part of the house which has been used exclusively for business purposes. So, for example, a room which is occupied for business use during the working day but occupied for family and residential purposes in the evenings and at weekends will qualify in full for relief.

On the other hand, HMRC take the view that where the residential use is occasional and very minor then relief can be denied. They give the example of a doctor who keeps some private possessions in a room used as a surgery – the room will be treated as used exclusively for business purposes.

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