Self-employed people are subject to different tax legislation than employees or directors who work from home and are generally allowed to claim more work from home expenses than an employee or director.
As a self-employed person working from home, you may be allowed to charge your ‘work from home’ expenses to your business and claim tax relief on them.
HMRC allows you to reclaim a flat rate per month, depending on the number of hours a month you would typically work from home. You don’t need to provide any records of the household expenses you’re claiming relief for.
- 25 to 50 hours a month = £10
- 51 to 100 hours a month = £18
- 101 and more hours a month = £26
If you believe and can prove by way of a ‘fair and reasonable’ calculation that your actual costs are higher than the flat rate, then you may claim the higher sum. You will need supporting evidence to show that the amount you are claiming is no more than the additional household expenses you have actually incurred and you must be able to prove that you pay these costs, and they are not paid by a partner or spouse.
You can claim:
You can claim a proportion of actual costs, which may include;
- Mortgage interest or rent on your home (Capital repayments are not allowed)
- Council tax
- Light, heat and power expenses
- Household insurance
- Telephone line rental
- ISP/broadband costs
- Invoiced household cleaning costs (excluded if you pay cash wages with no receipt to a cleaner)
- Household repairs and renewals (if the repair etc relates to the whole of the house, apportion the cost but if the repair relates solely to the part of the house that is not used for the business it is not deductible)
You can claim 100% of costs if they are ‘wholly and exclusively business-related’. You would charge these straight to your business.
- Business insurance – if business use is covered by a separate policy, then the cost of that policy is allowed in full
- Repairs of business equipment
- Office cleaning if it is only the home office being cleaned
- Office repairs and maintenance if it is only the home office being maintained
- 100% of itemised business calls made on your home telephone
- A second business line if incurred for business purposes
31-Oct- xx Double entry for work from home allowances. Where Bob calculates that he has £253 of apportioned WFH expenses plus £150 of business calls and £50 of business insurance to claim.
|WFM Allowance (P&L)||253.00|
|100% business calls (P&L)||150.00|
|100% business insurance (P&L)||50.00|
|Sole Trader – Cash In (BS)||453.00|
You cannot claim:
- Personal phone calls
- Any expenses that do not have receipts
- Any expenses that are paid by a partner or spouse
Calculating the expenses claimed:
It depends on how much of your house you use to work from home, and how many hours per day you use that space in your house. If your house for example, has 4 rooms excluding the kitchen, bathroom, hallways and garage and you used 1 room for 6 hours a day, 5 days a week you would take your annual allowable household expenses and calculate your allowable work from home costs as follows:
- £ Costs x (1/4) to calculate the costs of running that room per year,
- then multiply by (5/7) to account for the number of days per week you work from home
- then multiply by (6/24) account for the number of hours per day you work from home
- = the amount of work from home allowance you can claim.
- Or you can use our WFH Calculator!
|1||Do make sure you keep a record of your calculations|
|2||Do make sure you keep a copy of all bills used in your calculations|
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This masterclass covers the A-Z of business expenses. Learn which expenses can be put through your business, which are tax-deductible and which are not. Understand different accounting treatments for limited co and sole trader entities.
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