Are you self employed and working from home – what expenses can you claim?
As a small business accountant this is one of the questions that I am asked the most. People want to make sure that they are claiming everything that they can.
Working from home allowance
You have two choices for this – you can use the flat rate allowance approved by HMRC or do a more complex calculation to work out your actual costs.
Flat rate allowance
The flat rate allowance depends upon how many hours you work from home. You must work from home for at least 25 hours a month.
| Hours of business use per month | Flat rate per month |
|---|---|
| 25 to 50 | £10 |
| 51 to 100 | £18 |
| 101 and more | £26 |
Calculation
If you choose to do the calculation you need to add together all of the costs for running your home. Costs you can include are:
- rent or mortgage interest
- council tax
- electricity and gas
You then need to apportion these costs according to the size of your office compared to the rest of your home.
So for example, if your home running costs are £4,000 a year and your home office is one of eight rooms in your house, you can claim 1/8th of the costs, so in this example, £500. In this case it would be worth claiming the calculated amount as it is larger then twelve months of the flat rate allowance of £312 (for someone working 101 hours or more a month from home).
On top of this you can also claim the business proportion of your landline and broadband bills to your home address.
You include these costs in your self assessment tax return and they help reduce the tax you owe by offsetting against income.
If you would like to know more, please comment below or contact us.
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