Monthly Archives: August 2014

Funny Tax Laws from around the world

A collection of amusing tax laws, past and present.

Peter the Great introduced a beard tax. Any Russian wanting to remain beardy had to pay an annual amount and was issued with a beard token which he had to carry with him in public to prove he had paid.

Roman Emperor Nero introduced a tax on the collection of urine. Back then it was used to prepare animal skins – and you thought today’s taxman was taking the piss!

In Canada children’s breakfast cereal is tax exempt if it includes a free toy. The free toy must not be beer, liquor or wine – yes, they actually thought they needed to clarify that, imagine Coco Pops with a free beer toy!!

In Sweden there is a tax for naming your baby something that is not already in use. It is also applied to the misspelling of names and names like ‘Apple’ regardless of income, status and tax bracket.

Scaredy-cat tax was introduced by Henry I for English knights that didn’t want to go to war. It was originally very low and meant as a deterrent but King John later raised it by 300% and even collected it when not at war. This led to the formation of the Magna Carter.

In 1988 a stripper in the US called ‘Chesty Love’ successfully claimed her boob job as a business expense. This paved the way for anyone in the adult entertainment industry to claim cosmetic surgery expenses if it would lead to more work.

In UK tax law biscuits and cakes are deemed necessities and are exempt VAT but cover biscuits jaffacakein chocolate and they are luxuries that have 20% vat added to them. So Jaffa Cakes – are they biscuits or cakes? McVities invented them and they make biscuits so they were forced to go a tribunal and prove they are cakes – they won so they are non vatable chocolate covered cakes.

In the Netherlands tax deductions are allowed on training in magic and witchcraft after an actress claimed £1500 tax relief for a year long course in potion making, spell casting & crystal ball reading.

Cow Flatulence Tax – This is a new tax being introduced in EU countries. Cow farts cause 18% of global warming. Large clouds of methane hang in the air over slaughter houses where they store thousands of cows causing negative effects on air quality. Ireland tax $18 per cow while Denmark charges $110.

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HMRCs Home Office Policies

How much can you claim, for using a room in your home for business purposes?

HMRCs guidance uses typically vague words such as ‘fair & reasonable’ and ‘modest or excessive’. The trouble is someone earning mega money will think one figure is fair and reasonable but to most of us the same figure would seem excessive.

HMRC believes just £4 per week is all that should be claimed for the use of a home office. This measly amount is deemed as a ‘significant’ expenses and any claim over this amount must be justified by providing records or demonstrating your calculations.

How to can claim over the £4 per week

One way to prove your claim is reasonable is to calculate your monthly outgoings for gas, electric, rent, water etc then divide this by the number of rooms in the property (excluding kitchens & bathrooms).  For example if you have 5 rooms (Lounge, Dining Room, 3 Bedrooms) and one is used as an office take 1/5th of these bills.

If this amount seems too substantial for your business use you could divide it down further by the number of hours you spend in it working each day eg, 8/24 hrs or by the number of days per week that you work or by square meterage if known.

Beware

Be careful if claiming for more than one room as you will need more justification but it is possible ie a photographer could have an office and a darkroom (days before digital).

You should never claim the room is ‘solely’ for business purposes as this could lead to a business rates claim by the local council for part of your home or even Capital Gains Tax when you sell your property. Most people’s home office also doubles as a spare bedroom or is home to the unused exercise bike or the kids use it for doing their homework.

If you run your business through a Limited Company you can draw up a lease agreement so your company is reimbursing you for the costs of the room thus reducing your Corporation Tax but again, to be exempt from Capital Gains Tax when you sell the property make sure the agreement doesn’t state that it is solely and exclusively for business purposes.