Keep moving there...

IF YOU work from home you can claim a portion of your rent or mortgage interest payments against tax. But beware: If you register one room in your house as being used exclusively for your work, it will be subject to capital gains tax when you sell it. The advice of tax expert Eric Longley -- who spoke to the London Freelance Branch meeting on 12 July -- is never to work in one room only. "I tend to move my laptop from the kitchen to the bedroom from time to time," he said, "to make the point that while I work from home, no one part of my home is designated as my office."

Eric said that as many as 30,000 new jobs had been created in the Inland Revenue as a result of the introduction of the self-assessment system -- which had ostensibly been adopted to make things easier for the revenue and taxpayer alike. "So now instead of one cheque and one form," people with more than one kind of income have to deal with two, he said.

He urged members to make sure that they got their returns in promptly by 31 January to escape the imposition of arbitrary fines for late returns.

Q When I did my return, I calculated that they owed me some money. They have been completely silent since then. Should I do anything about it?

A There is a box asking whether you want to claim it back. If you ticked yes you should have had it back; if not they would treat it as a no. Write to them asking for clarification.

Q What about random testing and auditing?

A There is an appalling unfairness: if you are picked up for a random audit, you are advised to get an accountant -- and even it does not result in any change in the assessment, you have to pay them.

Q What legal protection do I have?

A Revenue officials are officers of the crown and are immune from prosecution. They are not liable for negligence. Any challenge will be political, not legal.

Q How do capital allowances work?

A You claim a quarter of the cost in the first year for depreciation of equipment, and then a quarter of the remaining value each following year. If you are sensible you can get relief back on things such as CD players, tape recorders, video equipment, and computer equipment. Claim a part of your TV, TV license, radio, and stereo if you use them at all for your business.

Q Do the revenue snoop on you?

A They do come to watch you. They do investigation work. You get checked up on if they suspect you. They ask questions at your bank and come round to look at your house.. People also grass you up. So make sure you get on with your neighbours.

Q Can you claim training costs?

A There are two sorts of training. Some is fixed and some is circulating capital. You can claim a deduction for keeping up your skills but not for training that is aimed at setting you up in the first place.

Q What should you do if you are sometimes employed (e.g. as casual sub) and sometimes self-employed.

A You will be in the worst of both worlds. You should watch out how much NI you should pay. But you will have to fill out two returns.

  • The Union can help self-employed subs avoid paying tax at source: contact the freelance office for details.

Sep/Oct 1998
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