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Level 2

Why is rent showing as a disallowable expense?

Only part of my monthly rent (an expense) is showing as an allowable expense for tax purposes. All of it should be allowable. What can I do to change this? Am I categorising it incorrectly?

Many thanks,

Di

Solved
Best answer May 10, 2019

Accepted Solutions
Highlighted
Level 2

Why is rent showing as a disallowable expense?

Hi Emma,

I have entered the hours I work from home and my self-employment started before 2018 so I can't enter the date it started. Until this tax year I had a combination of self-employed and PAYE income.

I work from home 16 hours a month and rent a room in a clinic for the rest of the time. It is the rent I pay for this room that should be showing as an allowable expense.

Di

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Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Can you please a screenshot the Tax profile and the transaction recorded for the rent which has gone to disallowable. I believe this is due to the hours posted tax profile which is then changing the allowable amount for rent expenses.

 

With screenshots we may be able to advise further.

 

 

View solution in original post

20 REPLIES 20
Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Hello Di

 

There are a few reasons why it might only put part of the expense into allowable

Can we just confirm whether in the tax profile in the cog in the top right, do you have any hours worked from home and also have you entered a date in the self employment start date?

 

Thanks

 

Emma

Highlighted
Level 2

Why is rent showing as a disallowable expense?

Hi Emma,

I have entered the hours I work from home and my self-employment started before 2018 so I can't enter the date it started. Until this tax year I had a combination of self-employed and PAYE income.

I work from home 16 hours a month and rent a room in a clinic for the rest of the time. It is the rent I pay for this room that should be showing as an allowable expense.

Di

View solution in original post

Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Can you please a screenshot the Tax profile and the transaction recorded for the rent which has gone to disallowable. I believe this is due to the hours posted tax profile which is then changing the allowable amount for rent expenses.

 

With screenshots we may be able to advise further.

 

 

View solution in original post

Highlighted
Level 2

Why is rent showing as a disallowable expense?

Hello again,

I've added in my self-assessment tax liability for 2018/19 and my rent is now all showing as an allowable expense!

I think it's sorted! 

Thanks for your help.

Di

Highlighted
Level 2

Why is rent showing as a disallowable expense?

I have same issue but can't see solution or don't understand here what I should do..?

Highlighted
Moderator

Why is rent showing as a disallowable expense?

Hello there, Bran,

 

QuickBooks Self-Employed uses the simplified expense method to calculate the deductions. There are types of expenses that may not be claimable.

 

I recommend consulting your accountant to make sure everything is accounted for correctly.

 

Check these articles for additional reference:

You can always visit us here in the Community if you have other questions about tracking your expenses in QuickBooks Self-Employed. I'm always here to help.

Highlighted
Level 2

Why is rent showing as a disallowable expense?

Hi Marry, thnx for your answer but it's very alibistic as I think if you're providing accounting software and are very proud of it on the public and to state that we as small businesses which basically can't afford to pay accoutants can fully relay on your BEST software and then just simply give me answer like this.? My question is not difficult and it's very clear Why system it's sorting out my office's rent to disallowed expenses.! And I don't think this is question for accountant but people behind software creation. 

Regards Bran 

Highlighted
Moderator

Why is rent showing as a disallowable expense?

Hi, Bran.

 

Determining whether or not an expense is allowable depends on the information you've on entered on your Tax Profile. Also, there are types of expenses aren't business allowable depending on your business operation, entity, and local regulation.

 

For example, if you entered more than 25 hours in your Tax Profile setting, the system will set your Rent/Utilities/Insurance expenses as disallowable. If you want to claim actual costs, you can leave the Business use of home office box blank and keep categorising your bank transactions. You can check this article for more detailed information: SA103F Categories.

 

To learn more about QuickBooks Self-Employed and its processes, check the following resource below:

 

Feel free to follow up with me if you have any other questions. I'll be happy to help you some more.

Highlighted
Level 2

Why is rent showing as a disallowable expense?

It says this is solved. How did you solve it?

I hardly work from home but QBSE claims £207 rent. I pay £4800 rent on my main workshop which QBSE says is disallowable !!!

Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Hi graham3d

 

How many hours have you entered in the Tax profile 'Do you work from home?' field?

Highlighted
Level 2

Why is rent showing as a disallowable expense?

Hi Graham,  no it's not solved for me but I think that someone from QB team think that after answer I got from them problem solved as noone actually tried to go deeper into it. I think that if you have set up in your tax profile that you work some hrs from home then automatically your rent is classed as disallowed which I don't  think its correct and don't understand why. Unfortunately I'm small businesse and can't afford to pay accountant and that's why I thought I can ask for help and advise from here but all I got was... consult with your accountant.... so try to look up your tax profile set your hours working from home to zero and your £4.800 should be allowed expenses system will do that automatically.  Any other home expenses if you do some work at home which I'm sure you do as every self employed person got always some paperwork to do at home class as other businesse expenses or maybe we get some lights into this from someone from QB team.

 

Highlighted
Level 2

Why is rent showing as a disallowable expense?

I have set 100hrs ...

Highlighted
Level 2

Why is rent showing as a disallowable expense?

16 hours a month from home.

200 hours/month in the workshop

Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Hi graham3d

 

What is the total amount have you entered in the Tax profile 'Do you work from home?' field? If you have entered any more than 25 the transactions that you add in relation to rent, rates power and insurance costs they will allocate a proportion of them as disallowable depending on how many hours over the 25 you have entered, see the enclosed link.

https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Highlighted
Level 2

Why is rent showing as a disallowable expense?

16 hours per month.

i.e. 4 hours per week ( Admin)

Highlighted
Level 2

Why is rent showing as a disallowable expense?

Thanks John,
But no, That doesnt work. I claim 4 hours per week (admin) working from home. I work upwards of 50 hours a week in my workshop. I pay rent on my workshop of £4,800. This expense is disallowed!! Only about £180 shows up in my tax return (the working from home portion)!
My tax return does not look right. Apart from the excess tax I am having to pay ( I am guessing  25% of the £4,800 rent, which now appears as profit!), I am concerned that the HMRC might fine me for filing incorrect accounts.
I am also losing trust in Quickbooks as they do not seem to understand my sort of self - employment. - a sole trader who makes things in a workshop. Sells them, or also makes bespoke items on site by commission.
Please help.

Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Hello Graham3d,

 

The reason why part of it will be going into disallowable is because you work over the 25 hours.  

 

If over 25 hours are entered it will split the expense between allowable and disallowable see explanation below

Simplified Expenses, Working from Home

Simplified Expenses also apply to Rent, rates, power and insurance costs/ Rent/Utilities/Insurance (box 21)

IF YOU ENTER 25 OR MORE HOURS in the ‘Do you work from Home’ field within the taxes profile and you categorise transactions as

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 disallowable (box 36)(We are not able to change this).

If you enter 0-24 hours within the ‘Do you work from home field’ all transactions categorised as Rent/Utilities/Insurance will be allowable.

 

If you are unsure still about this then speak to an accountant as we are not trained accountants. If any accountants or users experienced a simpler thing please feel free to comment on this thread. 

Highlighted
Level 2

Why is rent showing as a disallowable expense?

i didnt enter more than 25 hours. I entered 16 hours.

Highlighted
Level 2

Why is rent showing as a disallowable expense?

I entered 16 hours. This is less than 25 hours.

Highlighted
QuickBooks Team

Why is rent showing as a disallowable expense?

Hello there, @graham3d.

 

To help determine why your expense is showing as dis-allowable, I recommend contacting our Customer Care Team. They'll be able to check on the information entered in your tax profile and fix the issue.

 

The best way to reach our support team is to sign in to your account and tap on the Assistant option at the top.

 

Once done, type in "Talk to a human" and send it. Just follow the instructions that will prompt afterward.

Please see the screenshot and link below for your reference:

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You may also check out the link provided by John C to learn more about the basis of how QBSE calculates your transactions in the system.

 

If there's anything else that I can assist you with, you can always visit me here. Wishing you all the best in everything that you do.