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Mark59
Level 1

Home expense and tax summary UK

Hi, I know that I can add working from home hours to my profile, and that will automatically add appropriate 'Home Office Expenses' to my tax summary.

 

However, I actually make such a payment to my household joint account from my business account and would like this method to work. But these payments, even though marked as 'Home Office Expenses' are marked as 'disallowed' in the tax summary.

 

I don't understand why this is not allowed? Is there a way to make this work?

 

thanks

Mark

Solved
Best answer September 15, 2020

Accepted Solutions
GeorgiaC
QuickBooks Team

Home expense and tax summary UK

Hi Mark

 

The self employed product uses/defaults to the Simplified Expenses method when using the Home Office Expenses/Rents, Rates, power and insurance costs/Rents/Utilities. 

 

If you enter 0-24 hours, as in your case, within the 'Do you work from home?' field you will have to categorise all the transactions that relate to 'Home Office Expenses' as Rent/Utilities/Insurance if you want them to be allowable and they will populate in box 21.

 

Anything that is categorised as 'Home Office Expenses' if you enter 0-24 hours within the 'Do you work from home?' field will automatically be disallowed due to the system using the simplified expenses method.

 

If you enter 25 or more hours in the 'Do you work from home?' field within the taxes profile and you categorise transactions as 'Home Office Expenses' or 'Rent/Utilities/Insurance/Rent Rates, power and insurance costs' the system will start calculating using the method in the link below, a percentage will be allowable and the remaining amount will be disallowable (box 36). We are not able to change this. You may find this link and this page useful.

 

Thanks

 

 

View solution in original post

9 REPLIES 9
Ashleigh1
QuickBooks Team

Home expense and tax summary UK

Hello Mark59, 

 

Can you check in the main cog>tax profile and tell us how many hours you have put in there or send us a screenshot of the page.

 

If it is more than 20 hours entered this could be why it is being disallowed rather than allowed. 

 

Also, could you clarify this for us as well as, what do you mean by making a payment to my household joint account from my business account? Are you doing this as a transfer between the two accounts? 

Mark59
Level 1

Home expense and tax summary UK

I currently have 0 (zero) in my tax profile for hours worked from home.

 

I am making a regular payment from my business account to a joint personal home account, so yes, a transfer between the two accounts. I'm using the simplified expenses as allowed by HMRC, making a regular payment of £26 per month as I work over 101 hours per month from home. These do not include phone or internet expenses, they are treated seperatly.

 

My tax summary shows these payments as non-deductable despite being marked as home working expenses.

 

I know that if I put a number to the hours worked from home in the tax profile, this will add home expenses to my tax summary.

 

thanks Mark

Ashleigh1
QuickBooks Team

Home expense and tax summary UK

Thanks for getting back to us Mark, 

 

With this information are you able to send us some screenshots of the different pages so we can have a look at what's going on for you.

 

Thanks 

Mark59
Level 1

Home expense and tax summary UK

I've attached an image of my tax summary for 2019-20 which is showing home expenses in the disallowed column, despite being categorised as home office expenses.

 

I have 0 in the home office cog wheel home office hours preferences.

 

Thanks, M

Ashleigh1
QuickBooks Team

Home expense and tax summary UK

Thanks for the screenshot, 

 

This link will help you in regards to categories and how it works in Self-employed which soon help you. 

Mark59
Level 1

Home expense and tax summary UK

Hi, that really does not help.

 

Why when an expense is categorised as home working, is it then disallowed as such in the tax summary?

 

This is a simple question.

 

thanks

Mark

GeorgiaC
QuickBooks Team

Home expense and tax summary UK

Hi Mark

 

The self employed product uses/defaults to the Simplified Expenses method when using the Home Office Expenses/Rents, Rates, power and insurance costs/Rents/Utilities. 

 

If you enter 0-24 hours, as in your case, within the 'Do you work from home?' field you will have to categorise all the transactions that relate to 'Home Office Expenses' as Rent/Utilities/Insurance if you want them to be allowable and they will populate in box 21.

 

Anything that is categorised as 'Home Office Expenses' if you enter 0-24 hours within the 'Do you work from home?' field will automatically be disallowed due to the system using the simplified expenses method.

 

If you enter 25 or more hours in the 'Do you work from home?' field within the taxes profile and you categorise transactions as 'Home Office Expenses' or 'Rent/Utilities/Insurance/Rent Rates, power and insurance costs' the system will start calculating using the method in the link below, a percentage will be allowable and the remaining amount will be disallowable (box 36). We are not able to change this. You may find this link and this page useful.

 

Thanks

 

 

Mark59
Level 1

Home expense and tax summary UK

I'd like to reply to the reply to this message, but there is no 'reply' option.

 

Thank you GeorgiaC for making this much clearer, this now makes more sense, that the Simple Home Working expenses in Quickbooks Self-Employed only works through the cog settings. You cannot use the 'Home office expenses' expense category but must use the 'Rent/Utilities/Insurance' expense category for any real payments. I have to admit I don't understand why the 'Home office expenses' expense category exists as an option?

 

Mark

John C
QuickBooks Team

Home expense and tax summary UK

Hi Mark59 The 'Home Office Expenses' category is there if you use the simplified method for calculating the hours you work from home each month. You can only use the simplified method if you work 25 hours or more from home, hence the reason if you use the 'Home Office Expenses' category and you have entered 0-24 in the 'Do you work from Home?' field within the taxes profile the expenses will be disallowable, please refer to the HMRC link within the previous message. 

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