Working from home? Don’t forget you can claim costs!

For those of you who are self-employed, working from home is not a “new norm” and something you’re used to. However, for the vast majority of us, working from home is something we’ve all taken on over the past year due to the pandemic. So whether you’re self-employed or not, if you are working from home, there are certain costs you could be claiming for. But which ones can you? And how does that work?! Fear not, we’ve got it covered.

 

Your Home Office

If you are using your home as an office, you may be eligible to claim for expenses, however this will depend on the work you do. You may want to claim things such as; office equipment, computers or furniture. HMRC have rules around what you can claim, which we have covered below.

Key Considerations:

• You will need to be able to prove that you spend a regular amount of time doing your job in your home office
• There are different rules for limited companies and sole traders
• Office equipment that is necessary and essential for you to conduct your job will receive tax relief

Limited Companies

You have two ways of working out your home office expenses, a flat rate amount of creating a rental agreement between you and your limited company.

Flat Rate Method

The flat rate method, which is the more simple method, created by HMRC, asks you to look at the amount of hours a month you spend running your business at home, on average.

• 25-50 hours: £10 per month
• 51-100 hours: £18 per month
• 101 hours or more: £26 per month

The flat rate method only covers costs for heat, light and power. There are other costs such as; telephone or broadband you may also want to claim for.

HMRC does not treat this as a “benefit in kind”, which means you won’t have any tax to pay on the amount through your Self Assessment.

Sole Traders

For those of you that are sole traders, there are different rules and two options: you can choose to claim simplified expenses for the self-employed or you can work out your actual costs by calculating the proportion of personal and business use for your home. If you are not sure which option would be best for you, you can check on the government website: https://www.gov.uk/simplified-expenses-checker

As previously mentioned, you may want to claim for other household costs, which you are able to do providing your costs are outlined between private and business in a “fair and reasonable” manner.

Mortgage

If you’re self-employed and buying your home through a mortgage, you can claim a proportion of the interest only – not the capital repayment.

Rent

You can’t charge your business rent when you’re self-employed, because legally you are the business. But if you’re renting your home from a landlord, then you can claim a proportion of the rent for your business.

Council tax

You can claim a proportion of your council tax cost. However, depending on how much you use your home for business, you may have to pay business rates rather than council tax.

Telephone and Broadband

You can claim the full cost of all your business use of the line, and a percentage of the line rental, based on how much you use it for business purposes and how much is for personal use.

 

Working From Home As An Employee

If you are an employee working from home, you are still able to claim £6 per week (£26 a month) to cover your additional costs, either from your employer (provided they are willing to pay you) or directly from HMRC.

Check if you can claim on the GOV.UK website.

If you’ve agreed with your employer to work at home voluntarily, or you choose to work at home, you cannot claim tax relief on the bills you have to pay.

Closing Thoughts

As always, if you have any doubts or questions over what you can claim for or how you go about doing, it is best to speak to an accountant. Our team offers a free consultation call with our accountants who can take you through this. If you would like to book a call contact us:
[email protected]