Charging for your own labour

Reply to the comment left by "Puzzler " at "05/08/2013 - 19:20":

Hi - yes it can be confusing particularly between investment companies and trading companies. I always use an accountant, but did do accountancy in my Master Business degree so like to think I have some understanding. I still feel that any legitimate expense can be offset against profits. As an example last year I refurbished two properties in my portfolio for sale and one was a £61 000 fire damage refurbishment - all this was deductible from the final sale profits. It included improvements over and above the fire damage. Similarly I have done underpinning and structural repairs, extensions and improvements to properties and it has all been deductible. HMRC get tax from the increased sale value of the property due to the refurbishment, compared with the purchase cost.

Useful book is Tax cafe "using a property company to save tax"

I shall leave this discussion for others to take up as I have given my view and that is what this excellent site is all about.

Best Wishes Bob Grant B.Sc(Hons) M.Sc MRICs

Reply to the comment left by "Robert Grant" at "05/08/2013 - 20:21":

Hi Puzzler - one final comment

Regarding the document link you sent this quite rightly says the following

"In arriving at the profit or loss of a rental business for tax purposes you cannot make any deductions for capital expenditure."

I agree entirely, but this is revenue and not capital gain or profit from sale, which is where the deductions for capital expenditure come in.

Best Wishes

BobG

Reply to the comment left by "Robert Grant" at "05/08/2013 - 20:21":

Yes I was specifically referring to rental business not property trading or development. However accountancy and tax law are not necessarily the same and no disrespect to your impressive qualifications but if you use a reputable accountant then you are undoubtedly ok.

If you had done those improvements on a house you bought to let out they would not have been allowable - it is not the case I am afraid that any legitimate expense can be claimed for. For example in any business entertaining clients is not allowable against tax although it is a legitimate expense although nearly all small business owners believe that it is until they have it disallowed by their accountants!.

Reply to the comment left by "Robert Grant" at "05/08/2013 - 20:34":

Ah I see your distinction, capital allowances from income as opposed to the capital gain on sale.

On sale they can be claimed of course but during your period of ownership they cannot.

The problem I have with working on my own properties is that I cant claim costs from extenant for whatever
works I need to carry out.

Reply to the comment left by "Jan Martin" at "10/08/2013 - 12:00":

Why not?

Invoicing for tax purposes and making a claim through the Small Claims Courts or from a deposit are completely different.
.

Reply to the comment left by "andrew jones" at "05/08/2013 - 19:19":

I can't add anything to what the others have said other than perhaps you should get 3 quotes for all work prior to having it done then if your brother doesn't want to "muck in" get him topay you 50% of the lowest quote. That way you both know you are getting a fair deal and both share equally in the final spoils.

R

Reply to the comment left by "Puzzler " at "05/08/2013 - 20:56":

Businesses entertaining can't be claimed by a normal, taxable, trading business but the rules are completely different for a charity or "not for profit" organisation. I was shocked when I did some work for one of these organisations and was taken out on a regular basis by the head of the organisation to 5* restaurants where he ordered the most expensive wines and food on the menu. I never paid and asked how he got away with entertaining at such a high level and he told me that as a not for profit organisation it was perfectly OK and had been accepted by the tax office. It seems PC is rife with the tax office too and as we fear being called a racist or sexist, the tax office fears being called uncharitable.

Personally, I think it's time we removed the tax free status of charities that pay their CEO's over 50k a year., but that's another issue. I always wondered why so many charities keep springing up....... as Ron L Hubbard found out when he died a billionairre, the only true way to become fabulously wealthy is to start your own charity or religion. There are some very wealthy "social" landlords out there that have done so too.

R

Reply to the comment left by "r01 " at "10/08/2013 - 16:33":

we are getting off the subject a bit, but i do agree with you on the subject of charities, i am very selective when it comes to giving, seems a very large percentage of the money collected goes to the fat cats and not the cause. i know people who have worked for some of the big name charities and they confirm this practice, its a sad world we live in sometimes.

Its the magistrates that have a problem allowing me claim if i carry out the work .I can pay somebody else to do the work and claim the money back, but they are not happy for my husband to invoice.