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 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.

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.