How to claim home office expenses

Are you self employed? If you work from home, did you know that you can claim for a large range of “office” expenses against your tax bill? Read our advice below for a full rundown of exactly what you can claim – be careful though, you must ensure that you only claim the correct proportion i.e. the required costs for running your business.

What if I’m a limited company director working from home?    

In this case, your scope for claiming household expenses is much more limited, with utility bills and your business telephone being the main ones.

Sole traders can claim for a much wider range of household expenses, the most common of which are detailed below. The HMRC states “It will normally be appropriate to apportion these expenses by area and time.” You can read their official guidelines here – https://www.gov.uk/expenses-if-youre-self-employed/overview

What household bills can I claim for?

  • Mortgage interest (not capital repayment)
  • Rent
  • Council Tax & Water
  • Utility bills (heating & electricity)
  • Home insurance (only if it covers your business)
  • Repairs
  • Cleaning costs

Read HMRC BIM47820 for a full list.

Calculating how much to claim

This is the most difficult part, however we have included a formula below to simplify the process. The steps are as follows, with an example provided:

  • Count the number of rooms in your house (7 in this example)
  • How many of these rooms do you use for work? (2 – the living room, and an office).
  • How long do you use these rooms each day (percentage)? (living room 10%, office 80%)
  • Divide each bill by the number of rooms in your house (e.g. £490 annual electricity bill, divided by 7 rooms = £70 per room)
  • Multiply the bill’s room cost by the percentage of the day that room is used for business purposes (living room = 10% x £70, office = 80% x £70)
  • So, for the electricity bill, your total claim using this method is £7 (living room) + £56 (office) = £63
  • Repeat this step for each household bill you want to claim against.
  • HMRC has provided several examples of how to apportion household expenses to your business in BIM47825.

We hope you found this article useful. For further information about how we can help your business, don’t hesitate to contact Mark on 01259 721156, or email mark@stewartaccounting.co.uk.