Finding filling in those annual returns taxing? BARRY KERNON, from accountancy firm HW Fisher, the SJA’s auditors, offers advice in the first in a brief series on handling your tax affairs
Freelance journalists working from home are entitled to claim a proportion of their home costs as a deduction from income for tax purposes.
The expenses that can be claimed include mortgage interest or rent, Council Tax, lighting and heating, buildings insurance, contents insurance, service charges, ground rent, water (if metered), repairs and decorating. In other words, broadly all property running costs excluding improvements. Relief is not generally claimable on garden expenses.
It is important to have a rationale behind the claim for home costs. In a house with five main rooms – two bedrooms, two reception rooms and an office – the claim would be for 20 per cent of the running costs. Where a room is furnished as an office, a claim can be made on the basis of 365 days a year usage.
Where a room is used for a number of purposes, and not particularly furnished as an office, it would generally be necessary to time apportion the claim. For example, an employed journalist working five days a week, but freelancing on the other two, might want to claim 2/7ths of the appropriate costs. In other cases people may work in the evenings from home, while being employed during the day, and, once again, a claim would be based on the number of hours spent working at home.
Where there is no separate room allocated for work, a claim can still be made but it is necessary to calculate the number of hours spent working from home, and the approximate floor space of the area used for business purposes.
Consideration can be given to claiming for more than one room where, for example, there is an office furnished as such, and another room is used for meetings from time to time.
In the case of a property that is owned, if a claim is made to HM Revenue and Customs that the room is set aside for exclusive business use, a capital gains tax liability will arise on the disposal of the property. If, however, the room, while mostly used as an office, also contains private items – such as a spare bed, wardrobe, pile of children’s toys etc – although the expenses relating to the room are incurred wholly and exclusively for business purposes and are therefore claimable, the room is not set aside exclusively and no capital gains tax liability can arise.
- For further information please visit our website or contact Andrew Subramaniam +44 (0)20 7380 4947 or Barry Kernon on +44 (0)20 7874 7875
- You may also find our Authors and Journalists Tax guide of use
- The SJA is the largest member organisation of sports media professionals in the world. We now accept applications from student journalists as “Associate Members”. Join us: Click here for more details
UPCOMING SJA EVENTS
Mon Sep 15: SJA Autumn Golf Day, Muswell Hill GC – Book your place now. Non-members very welcome
Thu Dec 11: SJA British Sports Awards, sponsored by The National Lottery, at the Grand Connaught Rooms