Self-Employed? A Guide To Expenses You Can Claim When Working From Home

Not having to fork out for the cost of office premises and instead setting up at home is a great way to save money when you’re working for yourself. On top of this, there is the…

10 Minute Read

Not having to fork out for the cost of office premises and instead setting up at home is a great way to save money when you’re working for yourself. On top of this, there is the option to claim for use of the home for the self-employed, meaning you can reduce your tax bill.

The home expenses you can offset are wide-ranging, but they do require calculations in order to be claimed. Here, we guide you through the complete list of them, as well as the claiming process.

Utilities

A downside to working from home is that you’ll be using your utilities significantly more. You can expect to see higher charges for bills such as gas, electricity and water. Also, you may use the telephone and internet more too. And the longer you spend at home, the likelier it is that there will be wear and tear, and so you may need additional repairs.

Thankfully, you can claim for the proportion of these that you use when working, along with council tax. To calculate the amount, a fair method is required. This could be dividing the bills by the number of rooms used for business, or the total time spent working from home.

Rent or mortgage

The flat rate and other calculations can also be applied to the rent you pay your landlord, or your mortgage interest if you own the home. They can be claimed on even though they are fixed costs and so don’t increase with home working.

It is important to note, however, that there may be Capital Gains Tax to pay if a room is used solely for business purposes, and you then sell your home. A way around this is to ensure that the space is multi-functional. You may wish to give it the additional purpose of a music room or home gym, for example.

Use of home calculations

Calculating the ‘number of rooms’ method annually for your utilities would follow this example formula:

Annual mortgage interest: £6,798
Heat and light: £2,400
Council tax: £1,750
Water rates: £450
Total: £11,398

This figure would be divided by the number of rooms, under the assumption that each one uses the same amount of electricity. So if you had a seven-room home and used one as your workspace, you could claim £1,628 per year.

For the ‘total time’ calculation, you would first divide £1,628 by the number of hours in a week (168), and then multiply this sum by how many hours you spent working at home. If this time was 30 hours each week, then you would claim £290 per year.

Simplified use of home expenses

There is also the option to use simplified expenses for utilities, except for the telephone and internet. These allow you to claim for a flat rate, rather than calculating the actual cost of each utility. They do require certain criteria to be used, however – you need to work over 25 hours from home per month, and you can’t operate via a limited company.

The amount you can offset builds with the more hours you work. If you work from home for 25 to 50 hours a month, you can claim £10 per month; 51 to 100 hours allows you to offset £18 per month; and any hours greater than this will mean that you can claim £26 each month.

Travel

Travel is another expense you may be able to claim. Whilst you obviously won’t need to commute to get to your place of work, there may be business trips you take. You can claim for the journey as an allowable expense. The fuel can be offset if you drive, and flat rate expenses can be used for car mileage too.

If you instead use public transport for business travel, then you can claim for train, bus, air and taxi fares. Additionally, parking costs can be claimed, along with hotel rooms and meals on overnight business trips.

Trusted by over 10,000 subscribers

You don't need to be an expert to complete your self assessment tax return.

Get Started

How GoSimpleTax Works

01.
Register

Simply register for free with your full name and email address.

02.
Select Your Income

Select the income you receive and follow the hints and tips for potential tax savings.

03.
Validate Your Information

Validate your personal information and submit directly to HMRC to get confirmation in just seconds.

frequently asked questions

Work Anywhere, With Any Device

Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.

GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.

Get Started

"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"

Steve J.

Ordained Presbyter

"Easy to use and value for money. Everything you need to do your tax."

Gordon J.

Self Employed

"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."

Ross G.

Team Rector

Get Started