In the last year the pandemic has dramatically changed the way many of us work. More and more of us have been working from home, rather than visiting client premises or working in shared office spaces. All this means that new claims can be made for expenses incurred and used against your next tax bill.
There are different rules applying to self-employed individuals and for employees or directors. This blog considers expenses for self-employed individuals; however, employees and directors should visit my separate blog for details on what allowances are available to them.
What expenses can I claim?
You can claim a relevant proportion of various domestic expenses, including:
• Light & heat
• Rent
• Council tax
• Mortgage interest
• Metered water rates
• Insurance
• Property repairs
The relevant proportion can be based on floor area or number of rooms, and an apportionment should be made based on when the room is used.
Evidence of this calculation and the expenses incurred should be kept.
If you are going to claim these expenses, make sure that it is you that pay them and not a spouse or partner.
Is there an alternative?
The calculation of relevant expenditure above might be impractical, so as an alternative you can claim a fixed-rate deduction based on the hours you spend working in or on your business at home each month.
This would include hours spent on maintaining business records, marketing and making business appointments.
• Between 25 and 50 hours per month the deduction is £10 per month
• Between 51 and 100 hours per month the deduction is £18 per month
• For more than 100 hours per month working from home the deduction is £26 per month
You don’t have to keep evidence of expenditure to claim these fixed-rate deductions.
Home telephone and broadband costs
The fixed-rate deduction does not cover telephone and broadband costs and so an additional claim can be made for these.
Technically, the business and private use of telephone and broadband should be analysed over time so that an appropriate proportion can be claimed as a business expense.
However, this can be difficult in practice so HMRC allow that where private use is not significant the full cost can be claimed as a business expense.
For those of you who are new to claiming these expenses, it can be difficult to identify which option is the most beneficial for your situation, however if you have any questions at all please contact me for additional help and information.
