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Claiming Expenses for Working From Home – Self-Employed

Self Assessment, Sole Trader

Claiming Expenses for Working From Home – Self-Employed

Working from home is an increasingly popular way to achieve a work-life balance. Claiming expenses for working from home can lower your tax bill, saving you money for the future of your business.

Rule of thumb: You can only claim for costs associated with your business.

What can I claim?

  • Mortgage – You can claim a proportion of the interest only, not the capital repayment.
  • Rent – If you’re renting from a landlord you can claim a proportion of the rent for your business.
  • Council Tax – You can claim a proportion of these costs. However, please note that depending on how much you use your home for business, you may have to pay business rates.
  • Lighting & Heating – You can claim the business proportion of your gas and electricity costs in the rooms you use for business.
  • Telephone & Broadband – You claim this based on what your actual usage of the line is. You can claim the full cost of all your business use of the line, based on how much you use it for business purposes and how much is for personal use.
  • Property Repairs – Can be claimed in full if it relates solely to the part of your home used for business.
  • Water – Generally you can’t claim this as an expense. If you use a large amount of water for the purposes of your business you will need to apply to your water company for this to be separately charged.

Handy Hint: An easy way to claim for business expenses incurred while working from home is to use accounting software such as Free Agent. This enables you to split the relevant bank transaction so only the proportion being claimed is recorded as an expense.

There are 2 ways to claim expenses for Working from Home:

  • Simplified expenses – This can only be used if you work from home for 25+ hours a month. As the title suggests, it’s a simple method, however it only covers expenses for power, light and heat. GOV.UK has a simplified expenses checker to see if this method could save your business money. https://www.gov.uk/simplified-expenses-checker  See table below:
Hours of Business Use Per MonthFlat Rate Per Month
25-50 £10.00
51-100 £18.00
101+  £26.00
  • Costs Method –
    • Count the number of rooms in your home (don’t include bathrooms)
    • Identify rooms worked in and for each bill divide the cost evenly by that number.
    • You will then calculate the time you spend using those rooms and take that percentage of the divided cost. (Please note: If you have a room you use wholly for business purposes you may need to pay Capital Gains tax if you sell your home).
    • Please see an example below of how to calculate percentage of business use:

Normal use of room: 10 hours per day

Use of room for work: 2 hours per day

Percentage for business usage: 20%

Remember: You need to keep a record of any expenses claimed for 5 years. This can be a paper or electronic record.

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