If you are self-employed and work from home you are able to claim a proportion of your household costs as a business expense.
There are two ways of doing this:
Firstly, you can divide your household expenses into business and personal. Household expenses that you can claim for include things like
- Council Tax
- Mortgage interest or rent
You will need to calculate what proportion of the cost of items like these are for your business, for example:
You have 4 rooms in your home, one of which you use solely as an office every day, and your monthly electric bill is £400. Assuming all the rooms in your home use the same amount of electricity, you could divide your monthly bill by 4 (so £400 divided by 4), and you would be left with £100 as an allowable monthly expense.
If, however, you only work at home 1 day a week, you could further divide that £100 by 7, leaving you with £14.29 as an allowable electricity expense for that 1 day a week that you work from home.
Similarly, if you use a mobile for both business and personal calls you could determine what percentage of your calls are for business and apply that percentage to your monthly telephone bills.
Find out more about the expenses that you can claim here
Using this method to work out what expenses you can claim can be time consuming, and if you’d rather stay away from complicated calculations then you can use the flat rates of simplified expenses. This allows you to calculate your expenses using a flat rate based on the amount of hours you work.
Hours of business use per month Flat rate per month
25 to 50 £10
101 and more £26
If the amount that you work varies each month then that’s okay, just figure out how much you’ve worked each month and create a running total so that at the end of the year you know how much you can claim.
This method is great for allocating expenses such as electricity, heating and rent, however the flat rate doesn’t include telephone or internet expenses, so the business proportion of these bills will need to worked out using the first method.
To find out more and compare both methods click here.