- 16 Jun
Working From Home – Top Tips
With advances in technology, the number of people operating a business from their home is on the increase. Indeed there are many benefits to this, not least of which is a lack of commuting! But did you know that you are able to offset some of the costs associated with running your business from your house?
As a sole trader you are entitled to claim a proportion of your household bills, utilities, council tax and the interest part of your mortgage. You must be careful though to only apportion costs that are genuinely incurred as a result of running your business. This can be done on a ‘number of rooms’ basis, ‘area of house’ or if you prefer there is also a simplified, flat rate calculation.
The HMRC explain how you can do this here https://www.gov.uk/simpler-income-tax-simplified-expenses/overview
As long as you ensure that your calculations are reasonable and can evidence how you came to the final figure, the HMRC should have no problem with it.
If you are operating as a limited company, then as an employee you are entitled to claim expenses for working from home at a flat rate of £4 per week, without any need for receipts. Alternatively there is an option to reclaim tax relief for a number of other expenses such as lighting and heating and a dedicated business broadband.
As the rules are different depending on whether you are a sole trader or a director (employees), you should always seek advice from your accountant before making any claims.
Either way you could be missing out on saving money if you are not keeping correct records and accounting for working out of your home.