If you are self employed and work from home, then there are two methods you can choose from to claim for the cost of your home office against your taxes – a flat rate amount or a percentage of your homes actual running costs.

The Flat Rate Method of Claiming For Your Home Office

The flat rate method is a simplified way to claim for your home office, using rates set out by HMRC. It’s great because you don’t have to keep a log of your utility bills and receipts to support the claim.

How Much Can You Claim

Hours of business use per month Flat Rate Per Month
25 to 50 £10
51 to 100 £18
101 or more £26

What Should You Be Aware Of

  • You can only use this method if you work at home more than 25 hours per week;
  • You should still make a separate claim for business use of your telephone and internet (for which you must keep receipts);
  • Whilst this is a super simple method of claiming, you should check whether claiming for actual costs is more beneficial to you.

The Actual Method of Claiming for Your Home Office

You can claim a percentage of your actual household bills for your home office, but don’t forget to keep your bills. Typical bills you can include as part of your home office claim are:

  • Heating
  • Electricity
  • Rent
  • Mortgage interest
  • Insurance
  • Repairs
  • Cleaning
  • Council tax

How Much Can You Claim

  1. Count up the number of rooms in your house or apartment.
  2. Divide the total costs of the bills equally by each room.
  3. Estimate how much time you spend working in each room as a percentage.
  4. Multiply this percentage by the total cost for each room to work out your claim for business use.

An Example of the Actual Method of Claiming for Your Home Office

Alex works from home as a self employment business consultant. His apartment has a bedroom, bathroom, kitchen and living room. His electricity bill for the year is £850 therefore his claim for his home office is:

  1. Total number of rooms = 4
  2. Total cost of electricity in each room £850/4 = £212.50
  3. Alex spends 70% of his time in his living room working and 10% of his time in his bedroom working.
  4. Alex can therefore claim an allowable amount for electricity on his tax return as follows:

Living room 70% x 212.50 = £148.75

Bedroom 10% x £212.50 = £21.25

Total=£170

What Should You Be Aware Of

  • Keep your utility bills to support your claim.
  • You still make a separate claim for business use of your telephone and internet (for which you must keep receipts). I
  • If it makes more sense apportion the cost of bills according to floor space of each room, rather than equally (as in step 2 in our example above)
  • Don’t dedicate a room in your home to your office space, try to ensure dual use otherwise you may face capital gains tax or business rates being charged on the use of this space.
  • Your mortgage provider may have rules preventing you using your home as an office.
  • If you are unsure always consult an expert before you make your claim
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