Saturday, January 25th, 2020
As accountants we’re always going to advise you to not stretch your business beyond its means which sometimes leads to you running your business from home.
Working from home can benefit you more than just saving time on the drudgery of commuting every day. Here is our quick guide to the expenses you can claim.
Firstly, you should make the working space comfortable and practical at the same time. Working from the dining table with the washing machine running in the background and the kettle calling every two minutes isn’t going to lead to a productive day.
Working from your home is a cost-effective option for many self-employed people. You can claim for:
Self-employed people but not directors of limited companies can claim for the following:
There are two ways to claim, if you work more than 25 hours each month, you can use the simplified expenses method which is based on flat rates set by HMRC.
It all depends on the number of hours spent working from home each month:
Using this method removes the need to calculate usage proportions and actual business costs for each individual element. The flat rate however may not be high enough to cover the costs for everybody who works from home.
Don’t forget however if you’re a director you can’t claim part of expenses for rent, council tax, telephone or broadband because those expenses would have been paid personally anyway.
Use the HMRC simplified expenses checker – https://www.gov.uk/simplified-expenses-checker
If you decide not to use or are not eligible to use the simplified method, then you will need to calculate the proportion of time you use your home for. Not every self-employed person is office based, e.g. a plumber spends most of their working week in other people’s homes, rather than working from their own. A child-minder will spend more time at their own home.
To calculate the cost:
To avoid paying capital gains tax when you sell your home make sure the rooms you use for your business have a dual purpose, some business use and some family use. E.g. if you use the spare room as an office, have a bed in there too for occasional use.
If you’d like help with any of your financial admin contact us HERE, we’re always available for a coffee and a chat.