Heating & electric costs?

[Freelancetrainer]

Hi there.

I have a 3 storey house and only use the ground floor for business purposes. Do you think it’s reasonable to put a third through for tax relief rather than ‘ per room’. The only part of the ground floor that my clients don’t have access to is the kitchen so it seems simpler just to divide the gas and electric by the three floors instead.

Also, regarding my phone bill. I only use my mobile for business purposes but mostly just for messaging. Only a handful of people phone me and I them. Should I be putting anything through for my phone at all even though my messages and calls are unlimited and part of the contract? I wouldn’t be able to work out a cost based on number of calls and so I’m guessing probably best not to bother claiming towards my phone. Any advice?

Regarding water, I only use this fir manicures and pedicures do I wasn’t going to bother claiming that.

 

[salonfrog]

Hi

Depends. Are you a Ltd co or a sole trader?

 

[Freelancetrainer]

Hi. I’m a sole trader. I’ve actually checked out gov website on it all now. There doesn’t seem to be one method. I can either put it through as simplified expenses or calculate how much I use for the business. I used the little tool thing on the website and I may do it according to the number of rooms or floors.

 

[salonfrog]

Good work!

 

[salonfrog]

Just watch out that you don’t define a room or floor to be 100% business as it has implications on tax if you sell your house (capital gains) and also you don’t want to get into an argument with the council on business rates.

 

[RosieR]

Hi Freelancetrainer,
You should claim for water as well, because of the laundry of towels and cleaning of implements as well as pedicure useage. I divide my water rates by the number of sinks in my house and then add on say 1 wash load per week .
Detergent costs money as does electricity and then there is wear and tear on your machine plus tumble drying if needed.
If it costs say £3.50 per wash load at the laundrette, you decide what you feel is right.

 

[TheDuchess]

I worked out my laundry costs really carefully after my last washing machine broke down. Towels are hard on machinery because there's quite a heavy thump inside the machine when a load of wet towels start spinning. I also have a more expensive tumble dryer which has an A++ rating. It's running costs in electric are half the costs of a cheaper, less highly rated machine.

I allow a bit towards the coat of replacing my washing machine sooner than usual and the full cost of my tumble dryer because I never had one before I had a salon, plus electric, water, detergent (which I buy very cheaply in huge professional sized boxes whenever there's an offer on in Bookers) and it works out about £3 per load.

 

[Freelancetrainer]

Just watch out that you don’t define a room or floor to be 100% business as it has implications on tax if you sell your house (capital gains) and also you don’t want to get into an argument with the council on business rates.

Hi [emoji112]
My room is 100% business use but not the full floor. The kitchen and lounge are mostly personal use but the lounge is used on occasion if there’s any overlap of clients arriving and leaving so rarely used for clients. The website doesn’t say what they define as a room. Doing it by room would be more accurate but I’m sure I read somewhere else that you only include bedrooms and reception rooms, not bathrooms and kitchens but I can’t find that info again so not sure if that’s accurate or not.

 

[Freelancetrainer]

I worked out my laundry costs really carefully after my last washing machine broke down. Towels are hard on machinery because there's quite a heavy thump inside the machine when a load of wet towels start spinning. I also have a more expensive tumble dryer which has an A++ rating. It's running costs in electric are half the costs of a cheaper, less highly rated machine.

I allow a bit towards the coat of replacing my washing machine sooner than usual and the full cost of my tumble dryer because I never had one before I had a salon, plus electric, water, detergent (which I buy very cheaply in huge professional sized boxes whenever there's an offer on in Bookers) and it works out about £3 per load.

I work from home so I’m not sure how easy it would be to work out how much it costs me to wash the towels. I’d have to find a way of calculating the cost of running my machine just for business use against all the other electrics in the house. I’m not sure if I could be bothered working all that out. I can see me just going with the simplified expenses option [emoji51]

 

[Freelancetrainer]

The simplified expenses show a set figure according to the approximate number of hours worked. I’m assuming this set figure
(for example £26pm) is for each utility? I.e.: £26 would go down for electric. £26 for gas. £26 for water. So £78 pm in total. Is this correct? and not just £26 pm for the whole lot? [emoji15]

 

[salonfrog]

Hi [emoji112]
My room is 100% business use but not the full floor. The kitchen and lounge are mostly personal use but the lounge is used on occasion if there’s any overlap of clients arriving and leaving so rarely used for clients. The website doesn’t say what they define as a room. Doing it by room would be more accurate but I’m sure I read somewhere else that you only include bedrooms and reception rooms, not bathrooms and kitchens but I can’t find that info again so not sure if that’s accurate or not.

I remember HMRC saying that before but since then they’ve become less prescriptive (probably having lost a few Legal cases) and now give more guidance here:

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47810

 

[TheDuchess]

I’m not sure I understand your problem calculating laundry costs. Do you not have a feel for how much extra washing loads you do for business use? Every day or couple of days? HMRC are just going to look for what’s reasonable.

i use my washing machine for my personal and business laundry. I claim £3 for my estimate of the number of wash loads a week I do for business washing. No-one’s going to come round and double check your figures. Why don’t you just claim for a wash load for every day you work, or if you only work for a couple of hours and don’t do washing everyday, claim for a wash load every couple of work days.

It depends how busy you are and how much laundry you generate. Dont over think it, and don’t overlook it. Laundry isn’t free, it’s surprisingly expensive and you need to know your costs to set your prices - if you generate a full wash load from one massage you need to know that costs you £3!

 

[TheDuchess]

If you look up the spec for your washing machine (or a similar model) online, there will be a figure for electricity consumption per wash. That’s how you compare the energy efficiency of one model against another. Electricity is only a fraction of the total cost though.

I calculated the cost of washing my business laundry at home - the same as you. There was a thread about laundry costs a while ago and another geek also worked out the cost of a wash load as £3. So you could rely on our maths and claim £3 per wash if that helps.

 

[Freelancetrainer]

I must take the time to do that. I dint as yet do many wash loads as I mostly use bedroll to cover clients when doing intimate waxing so only probably one load a week to cover any manicures and pedicures. Thank you. I’ll check the info of my machine. [emoji846]

 

[Freelancetrainer]

I remember HMRC saying that before but since then they’ve become less prescriptive (probably having lost a few Legal cases) and now give more guidance here:

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47810

Thanks for this. Very interesting.

 

[Freelancetrainer]

Do any of you claim towards council tax when working from home? I’ve searched but can’t find information as to how to calculate that? Also, as a single occupant (apart from my children) I already get the single persons discount.

 

[BannerPenguin]

Do any of you claim towards council tax when working from home? I’ve searched but can’t find information as to how to calculate that? Also, as a single occupant (apart from my children) I already get the single persons discount.

Na, you can't do that as it's a residential cost. You're lucky they don't charge you business rates on top

 

[Freelancetrainer]

It seems that’s only for landlords. [emoji1]

 

[salonfrog]

The guidance on the link I gave above includes:

“
Some costs relate to the whole house and have to be paid even if there is no trade use. These include costs such as Council Tax (domestic rates in Northern Ireland), mortgage interest, insurance, water rates, general repairs and rent.

If part of the home is set aside solely for trade use for a specific period then a part of these costs is allowable. It will normally be appropriate to apportion these expenses by area and time. Some particular points are considered below.”