HMRC - claiming for your mortgage

[MrAnchovy]

Could you tell us a little bit more about yourself.

How long have you been an accountant for example is this your current job?

What other childminding forums did you use before, were the minders there happy with your information or did you end up with a debate there too?

Just out of interest

Angel xx

Gladly

I qualified in 1994 and continue to work as an accountant, although I do not currently provide tax advice to self-employed clients as I do not have the systems in place to do this cost-effectively. I'll let you all know if this changes!

I have been a member of ***** for many years, but primarily my childminding-related posts have been on Mumsnet. There is always debate on internet forums, but I think that my posts there are generally considered helpful - a google search seems to confirm that

[MrAnchovy]

HMRC are clearly contradicting themselves. Their own guidance manuals state clearly in a number of different places that (a relevent proportion of) mortgage interest is an allowable expense for self-employed taxpayers, yet the information they provide to childminders states that it is not.

It is not a matter of who is right - me or HMRC, one of these statements by HMRC must be wrong. I will take this up with HMRC in the appropriate way and report back.

[Carol M]

Thank you Mr Anchovy
Carol,x

[jumpinjen]

HMRC are clearly contradicting themselves. Their own guidance manuals state clearly in a number of different places that (a relevent proportion of) mortgage interest is an allowable expense for self-employed taxpayers, yet the information they provide to childminders states that it is not.

It is not a matter of who is right - me or HMRC, one of these statements by HMRC must be wrong. I will take this up with HMRC in the appropriate way and report back.

The information that Sarah is quoting states 'mortgage payments'..... aren't they different to the amount of interest that accrues on a mortgage anyway? So it is a non-debatable point in the end because sarah is right saying that Cm's can't claim 10% of a mortgage payment (say £467 a month payment for example) but Mr Anchovy is right too saying that Cm's/sole traders CAN claim a percentage of the INTEREST accruued over a year on the total mortgage value outstanding..... mine accrued to about £2400 last tax year....

Jen

[Pauline]

The information that Sarah is quoting states 'mortgage payments'..... aren't they different to the amount of interest that accrues on a mortgage anyway?

Jen

That is what I had wondered earlier. They say no in that particular section so that people don't think if you can take 10% for rent, you can do the same for mortgage payments.

[Pauline]

Gladly

I qualified in 1994 and continue to work as an accountant

Glad there is nothing fishy about you.

[MrAnchovy]

That is what I had wondered earlier. They say no in that particular section so that people don't think if you can take 10% for rent, you can do the same for mortgage payments.

Yes, Pauline and Jen that is the way that I read it - otherwise it just doesn't make sense, given that every other reference to mortgage payments I can find from HMRC confirms that you can claim (a relevant proportion) of the interest element.

[MrAnchovy]

Glad there is nothing fishy about you.

You OK with YouTube links here?

[Pauline]

I've been doing a little research and found this:

http://www.accountingweb.co.uk/anyan...inder-use-home

It appears that the question has already been posed to NCMA and they are supposed to be taking it back to HMRC, although this was last August

My thoughts are this:

You can use the NCMA/HMRC agreement if you wish, but you don't have to. You can go it alone and claim your mortgage interest if you wish and work out your own allowances.

However, you can't really mix and match, if you want to use the agreement and the allowances agreed, you can't then go on to put down mortgage payments claiming "NCMA and HMRC have an agreement on allowances".

Unless I am understanding this wrong.

[auntym]

hello mr anchovy when you clarify with hmrc please would you post.
only out of interest
i pay very little interest as it is as im on a tracker mortgage, but im just curious
thank you

[Pauline]

You OK with YouTube links here?

I remember that the first time round

You've certainly entered the lion's den by coming here

[TheBTeam]

I have an interest only mortgage, so the assumption is that i can claim as long as i dont include the policy that is designed to repay the capital in my calculations, (some hope that it will pay it tho! )

Also still need clarification about the cap of £30k and Miras, cos there is no miras so this is old rules, but is the cap still 30k?

[TheBTeam]

I've been doing a little research and found this:

http://www.accountingweb.co.uk/anyan...inder-use-home

It appears that the question has already been posed to NCMA and they are supposed to be taking it back to HMRC, although this was last August

My thoughts are this:

You can use the NCMA/HMRC agreement if you wish, but you don't have to. You can go it alone and claim your mortgage interest if you wish and work out your own allowances.

However, you can't really mix and match, if you want to use the agreement and the allowances agreed, you can't then go on to put down mortgage payments claiming "NCMA and HMRC have an agreement on allowances".

Unless I am understanding this wrong.

The heat, fuel and council tax stuff is the agreement, so are we saying that if we go down the route of using the calc based on number of rooms/number of hours worked in relation to our mortgage interest payments, we should then use this percentage for our other household bills instead of the HMRC agreed percentages?

or can you use the agreement percentages for those items and then your mortgage interest calc for this alone?

[Pauline]

The heat, fuel and council tax stuff is the agreement, so are we saying that if we go down the route of using the calc based on number of rooms/number of hours worked in relation to our mortgage interest payments, we should then use this percentage for our other household bills instead of the HMRC agreed percentages?

or can you use the agreement percentages for those items and then your mortgage interest calc for this alone?

I don't know, but I can't see an inspector letting you use the agreement AND doing it your own way, I would think it has to be one way or the other, no mix and match, but that is just my thoughts, I have no idea really.

Glad that we don't have a mortgage to worry about to be honest!

[jumpinjen]

The heat, fuel and council tax stuff is the agreement, so are we saying that if we go down the route of using the calc based on number of rooms/number of hours worked in relation to our mortgage interest payments, we should then use this percentage for our other household bills instead of the HMRC agreed percentages?

or can you use the agreement percentages for those items and then your mortgage interest calc for this alone?

That is how I understand it.... my accountant does the biz for me but does it on the rooms used basis and uses purely sole trader rules, not the HMRC/NCMA agreement... there are some differences i think, such as sole trader rules don't allow claiming of council tax whereas HMRC/NCMA agreement does (I think!!)

We seem to be picking through this some how between us all!!

Jen x

[angeldelight]

We seem to be picking through this some how between us all!!

Jen x

Thank goodness for that

Angel xx

[angeldelight]

Gladly

I qualified in 1994 and continue to work as an accountant, although I do not currently provide tax advice to self-employed clients as I do not have the systems in place to do this cost-effectively. I'll let you all know if this changes!

I have been a member of ***** for many years, but primarily my childminding-related posts have been on Mumsnet. There is always debate on internet forums, but I think that my posts there are generally considered helpful - a google search seems to confirm that

Thanks for that

Angel xx

[MrAnchovy]

I don't know, but I can't see an inspector letting you use the agreement AND doing it your own way, I would think it has to be one way or the other, no mix and match, but that is just my thoughts, I have no idea really.

Glad that we don't have a mortgage to worry about to be honest!

The law allows you to claim (a relevant proportion) of mortgage interest.

HMRC provides a concession to full-time childminders who may claim 33% of heating and lighting costs and 10% of water rates, council tax and rent.

I would be very surprised if an HMRC inspector decided to disapply a concession which would otherwise be available to an individual taxpayer on the basis that the taxpayer made a lawful claim of an unrelated expense (interest is not related to council tax, water rates or rent). If he did, I do not see how that decision could possibly be upheld on appeal. HMRC must apply concessions fairly, consistently and without discrimination.

If your accountant is up to date, it is probable that she should be claiming council tax as well - this is specifically mentioned in the HMRC guidance, although I think this guidance changed in 2008.

[MrAnchovy]

Also still need clarification about the cap of £30k and Miras, cos there is no miras so this is old rules, but is the cap still 30k?

There never was a cap of £30k on the business element, this was the cap on the purchase of your own home element.

[TheBTeam]

There never was a cap of £30k on the business element, this was the cap on the purchase of your own home element.

ok thanks for that.