All about Online Classified

If you Work From Home, either as a self employed person or as an employee, then you may be thinking about what tax breaks might be presented to you because you are making business use of some of your personal assets in the operation of the company . An Internet Business for example might be operated from home taking up a dedicated room which requires heating and lighting. Also computers and any other office equipment such as photocopiers or printers and fax machines are devouring your personal electricity. Most online jobs demand the same amount of operating costs when run from home so it is tempting to consider assessing all these costs, which would not have developed if you did not Work From Home, lump them together as business expenses and try to claim them as allowable against tax. It is a very sensible argument that you should not have to pay such expenses out of taxed income and indeed most accountants would agree with this belief. Your internet business, any online jobs you have, or any other work from home situations should not be subsidised out of your own wallet, particularly after you have paid tax in the first place.

But be aware of how far you take this. For example you may be tempted to add to this list of expenses a portion of your council tax bill. Envisage you need an completely different work space to enable you to work from home, a work space dedicated to your Internet Business or Online Jobs. This work space is used for nothing else so you can logically argue that if you didn’t work from home, you wouldn’t need this added work space and so your home could be reduced and your council tax bill thereby reduced. You may possibly argue that your business must therefore foot the bill for a portion of the council tax bill and that this should be allowable against tax on profits made from your business. You could work out the amount of council tax reclaim as the proportion of the floor area of your Work From Home room to the total floor area of your house. Let’s say that comes to 10%, you could argue that 10% of your council tax bill is directly attributable to your company and therefore us a business expense allowable against profit. This could very well be agreeable but the hazard lies in the future.

Presume that you had claimed as above for a number of years, regularly setting off that 10% and reducing your tax bill accordingly. Then one day you sell your house and you realise a very large profit. (If you own a house for a number of years then you almost definitely will). In the normal way of things any profit made from the appreciation of a property that has been used solely for residential purposes is tax free. But if the property has been percentage of the profit made on the transaction is owing to your company, rather than you as an person, and therefore income tax should be paid on that segment. The fact that you had frequently made claims for council tax would be strong evidence to support any such claim by the revenue and the net effect could be a large and unavoidable tax liability far greater than the savings you made over the years.