PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.
Self-employed workers can set business expenses against their Income Tax bills – but the rules on what is and is not deductible are tight and did not assist an actor who ran up a £32,000 rent bill on a London flat whilst appearing in a West End musical.
The actor rented the flat at a cost of £875 a week whilst treading the boards in the capital. That was cheaper than the cost of a hotel. He could not be expected to return to his home in Cheshire after each show and he had ‘lived out of a suitcase’ during his stint in London. However, HM Revenue and Customs (HMRC) refused to accept that his rent was tax deductible.
The First-tier Tribunal accepted that he had rented the three-bedroom flat for the purposes of his trade as an actor. However, in dismissing his appeal, it found that he had not used the property ‘wholly or exclusively’ for his work. As well as providing himself with warmth and shelter, he had entertained friends and family at the flat, and that was not a business purpose.