While the tax man will be very wary of anyone trying to pull the wool over their eyes with spurious claims, there are legitimate and valuable tax breaks associated with home working... and a professional accountancy body says that many home-run businesses are missing out because of the intricate nature of the UK tax system.
Tax relief is available on electricity, water, heating and even cleaning costs. House repairs are subject to tax deductions in certain cases, but the Association of chartered Certified Accountants (ACCA) says many businesses are not taking advantage of the tax relief.
Home-run businesses in London are particularly affected given the density of population and the commercial opportunities which exist for freelancers, contractors and starts-up operating in and around the capital
Recent figures estimate that there are 356,823 home business owners in London, with Wandsworth having among the highest percentage in the country. 32,840 workers are home business owners, accounting for 19 per cent of the total workforce in the borough.
Damian Connolly, ACCA Central London membersí network said: "'London and in particular Wandsworth has among the higher proportion of home businesses. The worst thing that could happen now in this atmosphere of innovation is for some of those new, emerging businesses to struggle due to unwarranted tax bills. With so much to think about when running a business, tax deductions can get overlooked. Itís worth doing your homework and getting sound advice to ensure you arenít paying more than you need to."
Chas Roy-Chowdhury, ACCA head of taxation, said: " 'The rise in start-ups from the home is good news for the economy, but whether these home-based entrepreneurs are aware that, for example, they can deduct tax for the electricity they use in the room where they do most of their work is another matter. Unless you are trawling through HM Revenue and Customs website, you may not know that even costs of hiring a cleaner can be deducted from your tax bill for the work they have done in the Ďbusiness roomí of your home.
"It might not seem like much, but over the space of a year, all these costs for heat, light, even decorating expenses add up and could help a new, home run business at a time when available cash is at a premium.
"Of course, it is not always straightforward and it will not always be clear what can and cannot be allowed. Getting it wrong could land you in hot water with HMRC, so itís worth going over what is allowed and what isnít with an accountant. "
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Susie Hughes © Shout99 2013